Innovation deficit in Pakistan



The Global Innovation Index (GII) ranks Pakistan 99th out of 132 economies in 2021. Pakistan’s score is 24.4.

This ranking is based on 81 different indicators grouped under seven pillars. One of the pillars is human capital and research, and Pakistan is ranked 117 there.

The capacity for innovation also means having the capacity to exploit new technologies. This includes the capacities of countries to facilitate innovation activities and the results of these activities.

Innovation can lead to sustainable economic growth, which can help countries achieve higher levels of performance and well-being for their citizens.

Among the top three are Switzerland, Sweden and the United States. Among regional partners, Vietnam is at 44, India at 46 and Iran at 60. India ranks second among lower middle income economies and first in Central and South Asia.

Although the evidence shows that there is a strong relationship between a country’s economic development and innovation, India and Vietnam among a few others have shown that this relationship is not necessarily always true.

India’s innovation performance is above average for the upper middle income group. So what prompted Pakistan to put on a not-so-impressive performance?

Pakistan has not been able to make significant investments in innovation in the form of R&D, education and solid infrastructure and innovative activities to support institutions.

Although the business environment has improved, the regulatory framework is still inadequate and government inefficiency is high.

Education expenditure as a percentage of GDP is 2.9%. Even though it is higher than that of Bangladesh (1.3%), the literacy rate is 62.3%. The literacy rate for women is even lower at 51.7%.

Pakistan’s literacy rate is the lowest in South Asia and Asia as a whole. People with low literacy skills are poorly prepared for the job market, further education and on-the-job training.

Of course, with these, it is only natural to expect Pakistan to perform poorly when it comes to innovation.

Pakistan ranks 134th in the Human Capital Index out of 157 countries. Investment in human capital and the quality of human capital are low. The development of human capital requires learning, education and training.

Higher human capital indicates that individuals will be more able to do their jobs efficiently. They will also be more inclined to innovation.

Increasing human capital can be done by improving the quality of education, increasing the literacy rate, especially among women, ensuring training opportunities to keep skills up to date and having better cultures that promote creativity.

Higher levels of human capital are expected to improve labor productivity and hence lead to greater innovation and hence higher per capita income in the economy.

The National Commission for Human Development was created almost twenty years ago in July 2002. Its objective was to strengthen human capital. But why haven’t we been able to see results and are still not able to innovate as much as other countries?

This is certainly not the case as the Pakistanis lack the capacity. Maybe the skills are not being used in the right direction. In addition, high rates of brain drain have limited Pakistan’s ability to innovate given already low levels of human capital.

A lack of security and opportunities as well as poor career advancement made it difficult to achieve aspirations at the national level.

According to the 2017 census, the total population of Pakistan is 207.8 million. The active population is 72 million and the participation rate is 50.24% in 2020 (World Bank).

The employment-to-population ratio provides information on the capacity of an economy to create jobs. PBS data shows it fell from 49.8% in 2006-07 to 50.7% in 2009-10, then slowed to 48.9% in 2017-18. Outside this basin, the number of skilled labor is quite low. According to APO’s Productivity Databook 2021, labor productivity in Pakistan is measured at $ 15,600. The average annual growth rate of total factor productivity in 2010-2019 is 1.6%.

A child born in Pakistan today will be 41% as productive when he grows up as he could be with a full education and full health. This figure is lower than the average for the South Asian region and lower middle-income countries.

These statistics show the low levels of use of human capital, the opportunities and the need to improve productivity.

Technical and vocational training opportunities affect a small proportion of the workforce and the majority have no means of acquiring and upgrading their skills. There is asymmetric information about the availability of these opportunities and the government needs to educate them.

The explosion of Pakistani youth can be facilitated by substantial improvements in the quality of education as well as the early childhood development of future workers.

Adequate basic skills to be acquired throughout schooling are essential for further accumulation of skills.

2018 data from the World Bank shows that the level of ‘education for learning’ (the number of years that the education attained is actually worth in terms of quality) is estimated to be around 4.8 years for children. enrolled in Pakistan, lowest compared to regional averages. This indicates the poor quality of education and therefore a cause of low levels of innovation.

What can be done to improve innovation?

In addition to increasing the ease of doing business and human capital, the government can work to increase public-private partnerships for infrastructure development.

Better transport systems, highways and railways, cleaner energy supplies and better communication networks could stimulate the development of high technology in the private sector.

Scientific research institutions need university-industry collaboration in R&D through the establishment of Research, Innovation and Commercialization Offices (ORICs) in universities, which has just started and needs to be further strengthened. .

Stimulating competition by removing subsidies and stimulating SMEs by encouraging venture capital funds, business angels and banks to invest or lend money to start-ups and small businesses will help stimulate innovation in the country.

A strong and efficient financial system can channel monetary resources to potential innovators.

The author holds a doctorate from the Department of Economics, Institute of Business Administration, Karachi

Posted in The Express Tribune, December 27e, 2021.

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