How to bridge the innovation gap
Over the past 60 years, some development gaps across countries have narrowed impressively, but others have persisted — and one has widened, with ominous implications for the future.
The world is developing technology at a rate faster than many countries can adopt it or adapt it to their needs. Because different people do things differently, technological adoption requires some adaptation to local conditions, which in turn requires local capabilities.
One metric of such capabilities is the rate at which countries file patents. The US patent rate has more than tripled over the past 40 years, from about 270 per million people per year in 1980 to around 900 in recent years. South Korea’s rate has increased by a factor of almost 100 in the past 40 years, from 33 to 3,150 per million. In Latin America and South Africa, however, the patenting rate is 70 times lower than in the US, while in the Arab world it is 100 times lower.
These incredibly low rates are notable for three reasons. First, they far exceed the gaps in university enrollment. Second, the patenting gap is huge relative to the gaps in scientific publications. One would expect very low rates of scientific publications if the problem was a lack of scientists. But in Latin America, the Arab world, and South Africa, the patent gap is up to 13 times larger than the gap in scientific publications compared with the US.
Finally, these gaps are large relative to other countries that, until recently, were less developed in terms of income, university enrollment, or scientific development. China, Malaysia, Thailand, and even Vietnam now outrank Latin America, South Africa, and the Arab world in innovation.
It is always convenient to blame governments for bad outcomes. But, in this case, the dearth of patents in middle-income countries with large university systems seems to be the fault of businesses and universities themselves. It is a symptom of an unexploited synergy between these two domains.
Universities in middle-income countries tend to be focused on teaching, and their better research scholars direct their efforts toward scientific publications rather than dirtying their minds with worldly practical problems on behalf of for-profit companies.
At the same time, businesses, especially large ones, invest astonishingly little in research and development, partly because they never have made such investments before, but also because they assume that they will not have any university partners with whom they can transform money into innovations. In a properly functioning innovation ecosystem, business investment in R&D would translate into large cashflows that universities could use to fund a significant and effective R&D capacity, without raising tuition fees.
For that ecosystem to emerge, universities in middle-income countries need to change their mindset, structure, governance, and hiring practices; and businesses need to learn the value of investments in R&D from their more successful colleagues in other countries.