Adding local innovations to low-cost labour

Dhaka,  Sun,  24 September 2017
Published : 18 Aug 2017, 20:22:11

Adding local innovations to low-cost labour

M Rokonuzzaman
The Bangladesh Council of Scientific and Industrial Research (BCSIR) has been established for the expansion of industrial economy through scientific and technological research. This institution started its journey in 1950s. Over the last more than 60 years, two regional laboratories have been built, one at Chittagong and the other at Rajshahi. Moreover, six institutions have been established targeting specialised areas, such as fuel, glass, ceramic and leather. 

Contribution of this national laboratory to the growth of industrial competitiveness is often questioned. In a recent media report, it has been mentioned that most of the 1000 technology innovations of this laboratory and its associated organisations  have been facing difficulty in finding entrepreneurs. On the other hand, due to weakness in local competence and non-availability of state-of-the-art technologies, many of our industrial segments, such as jute, sugar, poultry and aquaculture are facing difficulties in being self-sustaining. Major industrial sectors, such as pharmaceuticals, textiles, steel and readymade garments are fully relying on imported foreign technologies. Moreover, due to the lack of technology up-gradation, many of our indigenous production processes are facing extreme difficulty to cope with substitution forces. 

Apparently, there has been a disconnect between the technologies being developed by this national laboratory system and real-life demand. There may be many underlying reasons. The commonly cited one is the bureaucratic process causing complexity in getting licence of innovated/invented technologies. It is reported that due to such complexity, one of the laboratories located at Rajshahi found very poor entrepreneur-response for commercialising the technologies developed since its inception in 1968. The economic implications of these commercialised technologies in terms of generating new wealth through creating willingness to pay and cost reduction should be estimated. 

Moreover, the potential market demand of remaining technologies should be assessed. If those technologies are freely made available, will we find entrepreneurs queuing up to make investment to commercialise them?  Another question is: why isn't this laboratory targeting mainstream industrial activities? Moreover, are there entrepreneurs willing to pay this laboratory system to develop technologies?   

The BCSIR is primarily involved in developing technologies in isolation of partnership with potential entrepreneurs. As a result, upon developing technologies they wait for entrepreneurs to show up to license their technologies. Such approach is at the root of the gap between technology supply and demand, leading to as high as 80 per cent technologies being unutilised. Such disconnect appears to be a serious cause of concern for effective and efficient utilisation of whatever resources the laboratory system has been provided with. 

The BCSIR should go through a reform. Its present supply-led approach of technology development should change to a demand-driven one. 

Although development of new technologies creates the opportunity for innovating new products, creating new market, succeeding in such approach poses daunting challenge. For example, development of charge couple device (CCD) by Bell Laboratory in 1960s has created large digital imaging industry. The necessity of strong scientific base, absorption capacity of high failure rate, long-time frame and large investment need underpin the success of pursuing such approaches.

 Advanced nations have created institutional capacity to create technology success stories following supply-led technology development approach, but such approach is likely to be highly ineffective in the given context of Bangladesh. In this globally connected economy, the ability to deal with the forces of replication, imitation, innovation and substitution appears to be insurmountable hurdles for a country like Bangladesh to succeed following such approach. Moreover, in order to succeed to generate profitable revenue with a new technology, there should be flow of complementary technologies to keep improving the quality and reducing the cost of innovated products.  

Given the innovation capacity of BCSIR, it should rather replace the supply-driven approach with demand-driven one. To do so, BCSIR should undertake reform in all major areas, such as selecting technology development agenda, business model and governance structure. Instead of waiting for entrepreneurs after development of technologies, BCSIR should form partnership with entrepreneurs to decide which technologies to be developed. With the given market scenario, instead of attempting to support new product development, BCSIR should focus on developing technologies to back process innovation for improving the quality and reducing the cost of the products which are already being produced in a large scale. The financing of identified technology development agenda should be shared between interested entrepreneurs and BCSIR. To ensure market orientation, financing and governance model of BCSIR should go through a reform.  Government should provide only a small fraction (say 30 per cent) of the total budgetary requirement as core funding. Remaining 70 per cent should be targeted to be generated from contract services of technology development. The focus should shift from technology licensing to contract research and development services. The governance focus should change from elite scientific research laboratory to contract R&D centre. 

Basically, BCSIR's approach should be reversed, from technology licensing to working as contract technology development service provider. 

Some examples for BCSIR to draw lessons from are Fraunhofer-Gesellschaft of Germany or Battelle Memorial Institute of the USA. Instead of inventing new technologies creating new market for innovations, these institutions focus on incremental process innovations to expand competitiveness of existing productive activities. 

Upon commercialisation of low-cost raw labour, Bangladesh has reached low middle-income status. To maintain the economic growth trend towards high-middle income status by 2030, Bangladesh needs to add local innovations to low-cost labour. Such capability is crucial to deal with global market pressure for producing higher quality products at lower cost. To do so, the role of BCSIR could be crucial. Its funding model should be changed from full state sponsorship to contract-based R&D revenue. The governance structure should also change from bureaucratic elite state science research laboratory to industrial process innovation contract service provider.  

M Rokonuzzaman Ph.D academic, researcher and activist on Technology, Innovation and Policy is Professor, Department of Electrical and Computer Engineering, North South University, Bangladesh.

Editor : A.H.M Moazzem Hossain
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