Innovation has not been the hot topic for Pakistani economists; monetary, fiscal and energy affairs have kept them busy since time immemorial. However, faced with slow exports growth in a world where innovation is increasingly becoming a buzz word, the countrys economic community has been trying to grapple with innovation, or lack thereof, in Pakistan.
Some use the convenient framework of Global Innovation Index (GII) which revolves around government institutions and governance environment, human capital and research, infrastructure, knowledge and tech outputs such as patents as well as creative inputs. Others conduct firm-level surveys to develop an understanding of innovation in the country. One such survey has been conducted by Waqar Wadho and Azam Chaudhry of Lahore School of Economics (LSE), presented at the IGC-CDPR seminar held in mid-November.
Titled, Innovation and Firm Performance in Developing Countries: A case of Pakistani Textiles Manufacturers, the presentation pointed out that innovation rate increases with the size of firm: large firms have more than double innovation rate than smaller firms. Likewise, exporting firms are more innovative, whereas firms with local market share are the least innovative.
These findings echo what Mahreen Mahmud and Hamna Ahmed also of LSE highlighted in their paper presented at PIDEs 27th AGM. That paper was titled: What Determines Innovation in the Manufacturing Sector? Evidence from Pakistan. To that end, therefore, the paper presented at the IGC reconfirmed what was already known before.
However, there are two things highlighted by Waqar and Azam that deserve bigger attention. First, is their acknowledgement that economists overall understanding of innovation and its economic impact is still very limited in the case of developing countries, where most of the mainstream economists tend to assume that openness and easy access to foreign technology is all that matters in fostering firm productivity.
This does not only imply that Pakistans economist community needs to bolster their understanding of innovation. Given the age of innovation we are living, understanding this animal of innovation is paramount. However, this also implies that economists need to join hands with experts from other disciplines such as anthropologists, cultural studies as well as social psychologists to develop a historical and cultural understanding of innovation in different regions of Pakistan.
One lead to this end is the case of Sialkot. According to Waqar and Azams survey cited above, only six percent firms came up with worlds-first innovation. And all of them were from Sialkot. Considering that Sialkot is also from Pakistan and by and large faces the same kind of factors (which the likes of Global Innovation Index or Doing Business measures) that are faced by the rest of cities in Pakistan.
Second, important area that needs to be studied is the industry-academia linkage. Waqar and Azams study highlight that only five percent firms considered universities and public research institutes as important source of information and cooperation. Instead, firms considered market sources as the most important source of information and cooperation for innovation.
If that finding is any guide, then it should not only force Higher Education Commission to do some soul searching but also lead to a research on the innovation mindset and the culture of innovation within firms. Hopefully, the ensuing studies and panel discussion on innovation will be beyond economics.