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Managing Innovation in Small Developing Economies:
Evidence from the Caribbean
Keith NurseDirector
Shridath Ramphal CentreInternational Trade Law, Policy & Services
University of West IndiesBarbados
Outline of Presentation
• Framework of analysis• Overview of Economic Performance• STI Indicators• STI Initiatives• Assessment of Initiatives• The Way Forward
Rationale for STI Policies in Small Developing Economies
1. To shift the economy from low value-added commodity production (agriculture, manufacturing, tourism) to high value-added activities.
2. To address the problem of deindustrialization from Mexico, India, China.
3. To assist resource reallocation from declining to rising sectors.
4. To correct externalities associated with specific industries.
5. To enhanced the competitiveness of regional and diasporic firms in globally oligopolistic markets.
6. To address the problem of market failure and government failure.
Economic Performance in the
Caribbean1970s to 2005
Economic Performance in the
Caribbean1970s to 2005
Figure 4: Trade in Goods and Services in the Caribbean 1980-2005
-5000
0
5000
10000
15000
20000
25000
30000
1980 1985 1990 1995 2000 2005
Year
Mill
ions
of d
olla
rs
EXPORTS OF GOODS AND SERVICES, 1980-2005IMPORTS OF GOODS AND SERVICES, 1980-2005Balance of trade in good and services
Figure 6: Total Exports F.O.B. by Product Group in selected Caribbean* countries 1970-2005
0100020003000400050006000700080009000
1970 1975 1980 1985 1990 1995 2000 2005Year
Mill
ions
of d
olla
rs
TOTAL EXPORTS F.O.B. BY PRODUCT GROUP: MANUFACTURED PRODUCTS
TOTAL EXPORTS F.O.B., BY PRODUCT GROUP: PRIMARY PRODUCTS
Figure 5: Balance of trade in goods in the Caribbean 1980-2005
-5000
0
5000
10000
15000
20000
1980 1985 1990 1995 2000 2005
Year
Mill
ions
of d
olla
rs
IMPORTS OF GOODS, f.o.b., 1980-2005 EXPORTS OF GOODS, f.o.b., 1980-2005Balance of trade in goods
Share of Goods and Services in CARICOM Exports, 2002
REGION GOODS
SERVICES
CARICOM 52.8 47.2 CARICOM (-) T&T 38.3 61.7 OECS 20.3 79.7
Source: IDB-INTAL 2005: 82.
Figure 8: Share of Total and Travel Services Exports, 1993 - 2003
0
0.2
0.4
0.6
0.8
1
1.2
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
% Global Travel Services Exports % Total Services
-1,000.0 - 1,000.0 2,000.0 3,000.0 4,000.0 5,000.0
US$mn
2001
2002
2003
2004
Yea
r
Figure 9: CARICOM Balance of Services Trade 2001-2004
GovernmentServicesOther BusinessServicesFinancial Services
Insurance Services
CommercialServicesTravel
Transportation
Figure 10: Exports of computer and information services 2000-2003
0
10
20
30
40
50
2000 2001 2002 2003
Year
US$
mn
Barbados Dominican Rep Jamaica
STI Facilitation: FDI, Industrial Upgrading,
Brain Drain
STI Facilitation: FDI, Industrial Upgrading,
Brain Drain
Figure 11: FDI Inward stock as a percent of GDP
0 10 20 30 40 50 60 70 80 90 100
1980s
1991
1993
1995
1997
1999
2001
2003Y
ear
Percent %
T&T
Jamaica
Barbados0
FDI to Gross Fixed Capital Formation in CARICOM is twicethat for Latin America and four times that for the world andDeveloping Countries (CARICOM 2005).
World Bank, “Time to Choose” 2005
Focus has been on low value, low technology intensity activities. FDI had contributed little to dynamic specialization in higher value-added production due to limited knowledge transfers and weak research and development spillovers. The relatively low quality of regional production and exports is reflected in the technological intensity of exports.
Figure 7: Exports of durables and diffusers of technical progress as a percentage of total exports to the rest of the world selected
0
10
20
30
40
50
60
1970-1979 1980-1989 1990-1999 2000-2003
Years
Perc
en
tag
e %
Barbados
Costa Rica
Jamaica
Mexico
Trinidad and Tobago
Caribbean Trade & Investment Report (2005)
The culture of ‘production under licence’ still persists. Several relatively large CARICOM firms have opted to produce foreign-patented products under license when the life cycles of their indigenous product line have matured rather than engage in further product innovation. The sale of these goods is often limited to the domestic market resulting in net outflows of foreign exchange to the patent-holders (CARICOM 2005: 130).
Caribbean Brain Drain, 1990
Countries Tertiary Educated share of Total Migrants
Migration Rates of Tertiary Educated
Dominican Republic 22.6 14.2
Jamaica 41.7 67.3
Trinidad & Tobago 46.7 57.2
Guyana 40.7 77.3
The Physician Brain Drain to the US, Canada, UK & Australia
0
2
4
6
8
10
12
14
Emigration Factor
SSAIndian SCCbnM. East/N. AfrC & S. Amer
• The regions most impacted are SSA, the Indian Subcontinent and the Caribbean.
• There is much variation within regions.• The countries with the highest emigration rates are Jamaica
(41.4%), Ireland (41.2%), Haiti (35.4%) Ghana (30%), Sri Lanka (27%).
STI Indicators for the Caribbeanwith emphasis on the case of
Trinidad & Tobago
STI Indicators for the Caribbeanwith emphasis on the case of
Trinidad & Tobago
Figure 13: Innovation coefficients in the Caribbean (patent applications by residents/100,000 inhabitants)
0
0.5
1
1.5
2
2.5
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Year
Inn
ova
tio
n C
oef
fici
ent
JamaicaT&TCuba
R&D Expenditures and Share of GDP, Trinidad & Tobago, 1999 - 2004
1999 2000 2001 2002 2003 2004
R&D Expenditures (US$m) 8.4 10.4 10.4 12.1 13 15 R&D/GDP (%) n.a. 0.13 0.12 0.14 0.12 0.13
The Caribbean Council for Science and Technologyrecommends that Caribbean governments shouldspend at least 3% of GDP on R&D programmes.
The Caribbean Council for Science and Technologyrecommends that Caribbean governments shouldspend at least 3% of GDP on R&D programmes.
Expenditure on R&D in Trinidad and Tobago 2004 by sector
22%
29%25%
24%Higher EducationResearch institutionsGovernment departmentsState enterprises
Patent Registration in Trinidad & Tobago, 2000 - 2004
Applicants
2000 2001 2002 2003 2004
Residents
6 4 2 0 3
Non-Residents
148 235 221 231 205
Total
154 239 223 231 208
Table 6: Network Readiness Index
Brazil 38 South Africa 40 Mexico 44 Costa Rica 45 Trinidad and Tobago 46 Dominican Republic 47 Jamaica 56 China 64 Nigeria 75
Critical Perspective on STI in the Caribbean
Alumina, banana, sugar, tropical rainforests and other resources of vital economic interest to the region continue to be poorly understood and their diverse potential largely unexplored. What is most distressing is that there are significant earnings from economic activity in these areas but there is no endogenous research and development capacity to sustain them. There are of course, bright spots of excellent achievement in research in the region, but this is largely as a result of determined individual effort and initiative rather than a planned and sustained cultural movement toward regional or national science excellence in the economically vital fields (Ramkissoon 2007).
Caribbean Response• Jamaica
– UNCTAD, National Innovation Systems (1999)– UNIDO, Foresighting and Technology
Roadmapping• Trinidad and Tobago
– GORTT, Vision 2020– NIHERST, Foresighting study– eTeck, Focus on 7 new sectors: Leisure marine,
Fish & fish processing, Merchant Marine, Music & entertainment, Film, Printing & packaging, Food & beverage.
Foresighting Case Study:The Creative Economy in
Trinidad and Tobago
Foresighting Case Study:The Creative Economy in
Trinidad and Tobago
Trinidad and Tobago: Foresight Studies and Best Bet
Investments
• Biotechnology • Food & Beverage • Creative Industries• Niche Tourism • Niche Manufacturing• => National Innovation System• => Growth and Innovation Framework
T&T Creative Export Prospects 2016
• T&T creative sector has ranked in the top ten export sectors for the last decade and is projected to triple in the next decade.
• To achieve the 2016 target T&T needs to deepen its commercialization of IP; develop strategic market alliances; upgrade its human resources; expand its R&D pathways; rationalize its policy framework; and build a global brand.
278
720
2100
0
500
1000
1500
2000
2500
Exports TT$m
ExportsTT$m
278 720 2100
1996 2006 2016
Trade Policy Context for Creative & Cultural Industries
CULTURE INDUSTRIES & INTERNATIONAL TRADE
GOODS > Market Access
> Piracy & Infringement
SERVICES> GATS
> Immigration Policy
E-COMMERCE> Digital rights management
> Information & Communication
Technologies (ICTs)
INTELLECTUAL PROPERTY
> TRIPS > Rights Owners
> Collective Administration
UNESCO Convention on the Protection and
Promotion of the Diversity of Cultural Expressions (2005)
WTO
EPA
US Bilateral
WIPO> WIPO Copyright Treaty (WCT)
> WIPO Performances and Phonograms Treaty (WPPT)
The Way Forward:Technology Governance
Research Capacity StrengtheningStrategic Management of
Innovation
The Way Forward:Technology Governance
Research Capacity StrengtheningStrategic Management of
Innovation
Framework for Technology Governance
ENTE
RPI
SE
DEV
ELO
PMEN
T A
ND
C
LUST
ERIN
G P
OLI
CIE
S
TRA
DE
PO
LIC
IES
M ACROECONOM ICFRAMEWORK OF POLICIES
COMPETITION POLICY
INVESTMENT RULES
ENVIRONMENTALREGULATIONS
TEC
HN
OLO
GY,
K
NO
WLE
DG
E A
ND
IN
NO
VATI
ON
PO
LIC
Y
INFR
AST
RU
CTU
RE
POLI
CIE
S
INVE
STM
ENT
PO
LIC
IES
ENVI
RO
NM
ENTA
L PO
LIC
IES
SOC
IALL
Y Ğ
TAR
GET
EDC
OM
PETI
TIVE
NES
S R
ELA
TED
POLI
CIE
S
NATIONAL NATIONAL ENABLING ENABLING
FRAMEWORKSFRAMEWORKS
ACTIVE AND ACTIVE AND REGULATORY REGULATORY
POLICIESPOLICIES
Source: Corrales (2003)
Research Capacity Strengthening Framework Indivi dual lev el:
short -ter m tra ining long-term t raining (e.g. scholar ships) techni cal assist ance indiv idual consul tancy
Institutio nal level:
provis ion of equipm ent provis ion of library
facilities & onl ine access fund ing of instituti onal
ove rheads direct budget support instituti onal publicat ions local input into research
des ign local c ontrol of the
res earch ag enda local c ontrol of res earch
fund ing acq uisiti on of copyr ight
Rese arch envi ronm ent: nati onal com mitm ent to resear ch reg ional network ing North -South cooperat ion (e.g. twinning & partnerships) South -North cooperat ion South -South cooperat ion
Resea rch Capacity Str ength ening
Strategic Management of STI in the Caribbean
• Investment in human capital and enterprise developmentis a critical area because innovation starts with the creativity of individuals and firms.
• Expand beyond intellectual property protection & administration to include IP management and exploitation of copyright and geographic indicators.
• Strategic marketing and IP branding in niche areas is required to build market loyalty and raise local value-added.
• Apply STI approaches to traditional (bananas, sugar, rum) as well as new sectors (tourism, ICTs, creative industries).
Strategic Management of STI in the Caribbean (cont’d)
• STI mapping and indexing for measurement, management and strategic planning.
• Research capacity strengthening beyond the level of individuals to incorporate institutional and systemic growth.
• Trade policy needs to be informed by industrial and innovation policies.
• Move beyond national framework for STI to adopt a regional and diasporic approach.
