Innovate or bust - taking the next step to redemption

We have read that Europe as a whole is a laggard compared to Asia and US where funding for innovation and research is concerned. Data downloaded from Eurostat speak volumes and indicate that we must step up investment in order to maximise impact on a glob

Predictions seen in the Horizon 2020 innovation roadmap look rosy and welcoming but in truth there is some way to go for it to be rated a triumph. Horizon 2020 is the clarion call by the EU to catch up with the rest of the advanced countries where technology, market-creating innovation and industrial leadership targets are concerned. Sadly, at a European level, there remains an innovation gap. It aims to spend three per cent of GDP annually.

Malta’s contribution on a national level for R&I quoting latest Eurostat figures is a paltry 0.6 per cent of GDP with no funds coming from the government sector. In fact, the expenditure is shared equally by private enterprise and higher education sectors. The trophy goes to Sweden with almost 3.3 per cent of GPD invested. The targets to be reached by 2020 touch various sectors.

As indicated earlier, Europe must try to increase combined public and private investment in R&D to three per cent of GDP (currently close to 2.2 per cent). Another target is reducing school dropout rates to less than 10 per cent (in our case the dropout rate is the highest in the EU). The percentage of worker participation has to reach at least 75 per cent (age group 20-64). Malta has a lower rate in male participation and in the case of females a much lower rate, although this is gradually improving. Malta promised to increase its share of renewable energy to reach at least 20 per cent, but so far less than 10 per cent is generated from PV modules. On a positive note, substantial welfare benefits have been announced in the 2019 budget to reduce poverty, social exclusion and improve pensions. All this comes into perspective when one reads about the recent visit of Martin Kern, the head of the EU’s innovation body. He was in Malta for an awareness day organised in conjunction with the Malta dustries. As stated earlier, the government has vowed to turn Malta into the next “Blockchain Mecca” in the Med. This is an ambitious vision and should be applauded. Be that as it may, the ideal textbook solution is to induce a mindset in our graduates towards innovation, smart research and development. This means that to reach the targeted rate of three per cent of GDP, we must allocate the princely sum of €300 million annually. This is no joke, yet the money collected from the sale of passports can come to the rescue. It will be money well spent for posterity.

Being an island nation, we feel snug in our cocoon while the world is experiencing stellar growth in areas such as Artificial Intelligence, Big Data, machine learning, biotechnics, nanotechnology, and autonomous vehicles - among others. These are the building blocks of present and future technology where young businesses compete to provide cutting-edge services and products, having access to research and innovation facilities coupled with proficient management. Just look at the vast amount tech giants spend on R&D. Amazon leads the pack with a budget of $23 billion annually. Google is currently spending $16 billion on research, Intel $13 billion while Microsoft devotes $12 billion and Apple $11 billion. In all that is upwards of $75 billion annually. This arsenal of funds is being spent researching artificial intelligence, robotics, drones, green energy, oncology, smart homes and the Internet of Things. All this, dwarfs the amount budgeted by EU for Horizon 2020 of €80 billion for seven years covering cost of innovation and research. It pours scorn on the tech revolution conscious that the EU is seriously thinking of taxing the growth of digital commerce by imposing a three per cent tax. But observers comment that taxing the evolution of new ideas is not the answer to combat free market capitalism.

Since the industrial revolution with the discovery of the steam engine, progress has helped mankind develop new ideas and useful gadgets. This has increased the sum of human knowledge even though critics lament that huge sums of money are risked in the process. Innovation will keep the tech giants asking more questions and disrupting existing methods of doing things to arrive at new designs and creations. Just remember the spin-offs of the Space programme of the Sixties; the outcome of this research was criticised as being unpredictable yet the gamble proved successful. Without taking risks, the future of Malta’s manufacturing and services industry face an upward struggle partly due to the double insular handicap located on the periphery of Europe as well as ageing demographics and a looming pensions time bomb.

Regardless, these drawbacks make us more conscious of the drive to train our workforce which, aided with venture capital and transfer of technology, can compete to match the successes of our competitors. Ultimately, a driver for this vision will be ideas and innovation, the likes of which drove the industrial revolution in Europe some 200 years ago.

This may seem pie in the sky as Malta can never hope to be a leader in research and innovation. We cannot afford it. Without the necessary funds, how can we seek disruptive ideas and turn them into improved manufacturing and services output unless political and business leaders decide to take a quantum leap. This starts with creating a can-do attitude, fostering knowledge exchange. In turn, this acts as a catalyst for invention. In the words of Mr Kern, we must search for niches where there is a real edge and genuine potential, and then research them to discover how to fully exploit their values.