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Adopt science, technology and innovation strategies as integral elements of national sustainable development strategies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

There is no single optimal system or policy blueprint for a national STI policy and innovation strategy, since the innovation context varies greatly between countries. Both public and private actors contribute to the innovation process, with Governments often the main funder of basic research, which is critical to the absorptive capacity of countries. Private actors play a more prominent role in development, demonstration and diffusion of technology. Even in these latter stages, public policy and public funding are often critical, and key components of a national innovation strategy.

The amount of expenditure on R&D as a share of Gross Domestic Product (GDP) is the most widely used indicator to measure countries' efforts in STI. This indicator is also used to measure the progress towards achieving SDG Goal 9.  Global public and private research and development (R&D) expenditure has remained relatively constant, growing only modestly between 2009 and 2015, from 1.64 to 1.70 per cent of GDP. While lower overall, R&D expenditure in developing countries grew at a faster rate, driven to a significant degree by China, which is now second only to the United States in R&D expenditures. In LDCs on other hand, only around 0.24 per cent of GDP is dedicated to R&D. Generally, absolute spending remains highly concentrated, both in terms of countries and firms. The 200 largest global firms, which are concentrated in the United States, Japan and China, account for 70 per cent of all business R&D spending

Developing countries and their firms and entrepreneurs spend significantly less on R&D than developed countries, despite high potential returns associated with technological catch-up. One reason is that returns to innovation cannot be realized in the absence of key complementary factors, such as physical and human capital. National innovation strategies thus need to be broad in order to address broader constraints to innovation, and be embedded in sustainable development and productive diversification strategies. Policies should also take into consideration gender equality throughout the policy process—from design to evaluation—and consider technology foresight and assessment as tools to ensure the inclusive application of STI for sustainable development.

Public leadership is particularly important in so-called mission-oriented innovation that aims to tackle grand structural challenges such as climate change. Indeed, the 2030 Agenda for Sustainable Development calls for transformative change in many areas, which requires public policy to target not only the rate but also the direction of innovation. Many countries are already focusing innovation policies on specific socioeconomic sectors, such as agribusiness, biotechnology, the software industry and climate change. Examples include Inova Agro, a fund targeting the agribusiness sector in Brazil, FONSOFT in Argentina and PROSOFT in Mexico, which provides SMEs in the software industry with competitive funding. Some countries have also implemented taxes and other mechanisms to redirect funds from companies to support sectoral and general research activities. One example is a levy on palm oil producers in Malaysia that funds research in the sector.

Another key constraint is that start-ups and SMEs often have difficulty accessing venture capital. Countries have set up targeted funds and are partnering with multilateral organizations and private venture capital firms to close this financing gap. Examples include the Islamic Republic of Iran’s Innovation and Prosperity Fund, which offers tax incentives and pays partial costs of commercializing knowledge and technology to SMEs, and Azerbaijan’s State Fund for the Development of Information Technologies, which provides start-up funding through equity participation or low-interest loans.

The United Nations Department of Economic and Social Affairs (UN/DESA) is implementing a four-year project for mobilizing STI in developing countries for the SDGs. UNCTAD continues to support the development of national capacities in the STI policy field through its science, technology and innovation policy (STIP) reviews, and is currently revising the framework with a view to incorporate SDG considerations into the STIP reviews. To prevent the evolving digital economy from leading to widening digital divides and greater income inequalities, UNCTAD launched the eTrade for all initiative in 2016.

The International Telecommunications Union (ITU) has a large capacity-building programme focusing on strengthening skills among its membership in a wide range of ICT-related topics. Through the ITU Academy, which has more than 10,000 users, and its Centres of Excellence network, it delivers face-to-face and e-learning courses to beneficiaries from all regions.

However, efforts have been conducted by various UN bodies and other international agencies to assess the innovation systems of countries. For instance, since 2008, UNCTAD has been conducting 15 STI policy reviews with the aim of strengthening the national innovation capacities of developing countries, and to ensure that their national STI plans and programmes are able to support their broader national sustainable development agenda. By the end of 2016 UNCTAD had completed the STIP review of Iran (Islamic Republic of) and was in the process of completing the review of Rwanda.

 

 

Research and development intensity (R&D activities as a percentage of GDP), regions, 2010 and 2014

 

2010

2014

World

1.62

1.69

Arab States

0.26

0.32

Central and Eastern Europe

0.94

1.05

Central Asia

0.18

0.18

East Asia and the Pacific

1.87

2.07

Latin America and the Caribbean

0.65

0.69

North America and Western Europe

2.37

2.41

South and West Asia

0.69

0.72

Sub-Saharan Africa

0.40

0.41

 
Source: UNESCO Institute of Statistics. UNESCO region and sub-region definitions.
 

The table shows the data on R&D intensity (percentage of gross domestic product (GDP) devoted to R&D activities) by regions and selected economies. The data show an increase in efforts between 2010 and 2014 for all regions and most of the economies selected except Central Asia. The regions with higher growth in their R&D efforts during this period are Arab States and Central and Eastern Europe. In contrast, North America and Western Europe and Sub-Saharan Africa are the region with the smallest growth in R&D intensity. However, in order to increase their level of R&D/GDP, countries' efforts in R&D would need to grow at higher rates than their GDP.

The STI performance of a country, as well as the economic and social impact of STI, is also affected by the quality and level of interactions and flows of knowledge between agents in the innovation system— such as firms, knowledge production organisations (universities and research centres), public agencies and intermediate organizations. These interactions are enabled (or not) by infrastructure, market forces and public policies. The systemic nature of the innovation process underlines the need to incorporate scientific and technological knowledge into national development strategies and plans in order to make effective use of innovation.

UNCTAD works on STI for development through various ways, including by servicing the UN Commission on Science and Technology for Development and carrying out national Science, Technology and Innovation Policy (STIP) reviews. UNCTAD's work on STI for development has revealed challenges on national STI capacities that hinder the capacity of countries to ensure STI help achieve the SDGs, including: a lack of capacity to formulate coherent STI policies and to integrate them into development plans; a lack of human resources in science, technology, engineering and mathematics (STEM); and a lack of absorptive and innovation capacity of local firms.

Stronger focus on investment in STI, and the rapid adoption or diffusion of technologies and innovation will be needed for developed and developing countries to fulfil commitments related to these commitments. Three main considerations can be highlighted based on the findings from these reviews as well as from related initiatives:

a. STI policies need to be coherent with national development strategies

The integration of STI policies into national overall strategies influences the capacity of countries to capitalize on STI for sustainable development. The linkages between STI policy and other development policies —such as those relating to industry, foreign direct investment, trade, competition, education and training, entrepreneurship, and small and medium enterprises— need to be acknowledged. Efforts need to be placed on understanding these linkages in order to ensure adequate coherence among these policies as well as addressing weaknesses in the wider framework conditions that go beyond narrowly defined STI policies.

b. Local context needs to be considered in the design of STI policy

The context to STI policies varies greatly by country. Therefore, the particular national characteristics need to be considered when designing STI policy. In developing countries, innovation is largely incremental, characterized by small changes to existing process and products rather than radical or large scale innovation. Also, it is mainly found in the traditional sectors as they generally dominate these economies. At the same time, developing economies often have large informal sectors and many small and micro-enterprises with limited capacity to adopt new technologies, invest in R&D, training or innovation, or to introduce major innovations.

Further, new and emerging technologies, such as big data, the Internet of Things and digital automation, can create opportunities and benefits for countries but also can pose challenges to achieving the SDGs. The deployment of these and other technologies can increase or even create new divides between countries if the capacities of accessing and taking advantage of these technologies are absent, as pointed out in the United Nations Secretary-General’s 2016 report, Foresight for Digital Development.

Attention to local context also involves addressing the absorptive capability gap of countries and their innovation actors. This underscores the importance of human capital development, notably through STEM education and skills development, as well as infrastructure development.

c. Attention should be paid to capacity building in STI policymaking

There is a common persistence of a linear rather than a systemic understanding of the innovation process in many countries. This tends to result in a narrow focus by policy makers on scientific research, as opposed to a focus on addressing systemic weaknesses for achieving wider policy goals. This underlines the importance of improving familiarity of policymakers with innovation concepts. Also, attention should be given to increasing the understanding of STI policy tools and design, including monitoring and evaluation of these policies. Increasing the knowledge of STI issues may help improve the implementation of STI policies and strategies, and increase the support to policy action in this area. Furthermore, building the capacity to collect more comprehensive data on innovation processes can inform policymakers on aspects of the innovation ecosystem beyond readily available indicators like R&D. In addition to data on some countries available through Eurostat, the UNESCO Institute for Statistics collects innovation data from other countries at all income levels.

At the same time, the transformative power of new technologies raises challenges and risks. Their rapid diffusion puts great pressure on societies and individuals to adapt, and also risks leaving behind those that do not have access to the required skills or infrastructure. Many developing countries struggle to employ new technologies with the same degree of intensity and versatility as developed countries.