Human Capacity And Diffusion Of Innovation Amidst Globalization By Dr.Musadik Malik, Noor

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Published on November 26, 2008

Author: muzkara

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Knowledge Forum | http://www.noor.org.sa | Day 3 - Panel 2 - Human Capacity And Diffusion Of Innovation Amidst Globalization By Dr.Musadik Malik, Noor

Human Capacity and Diffusion of Innovation amidst Globalization: Development or Demise? Noor – Madinah The Kingdom of Saudi Arabia 24 June 2008 Dr. Musadik Malik Managing Director Boston Innovation Partners

Diversification, private sector participation, enabling environment and world-class human capital are the building blocks of prosperity

Innovation is empirically linked with prosperity … Source: MONE Income and science & technology capacity Western Europe, Australia, USA, parts of Asia Africa and North Korea KSA USA 6

… because innovation is the only way of sustainable productivity improvement

Innovation ecology is grounded in strong innovation capacity, excellence in a few clusters and an enabling environment

Amidst globalization, Innovation in developing countries has been driven by the FDI and multinational firms 63,000 MNCs have established 690,000 foreign affiliates FDI inflow is valued at $ 4,800 billion (1999) Generated more than $ 3,000 billion in gross product Created over 40 million jobs in host countries Multinational Corporations Playing! Globalization at Play!

63,000 MNCs have established 690,000 foreign affiliates

FDI inflow is valued at $ 4,800 billion (1999)

Generated more than $ 3,000 billion in gross product

Created over 40 million jobs in host countries

The FDI and MNC driven innovation ecology has produced mixed results!

When the differential in human and intellectual capacity between MNCs and the host country is low, diffusion of innovation leads to fierce competition Multinational Corporation Government Policies and Regulations Suppliers Buyers Foreign Affiliates Knowledge Contract Research Organization Spill-Over Competitors Competitors Competitors Competitors Demonstration Labor Turnover Competition

When the differential in human and intellectual capacity between MNCs and the host country is huge, crowding out leads to colonization of local industry Multinational Corporation Suppliers Buyers Competitors Foreign Affiliates Centralized / concentrated Research Knowledge Government Policies and Regulations Hurray … No Competition Crowd Out! Warning: The innovation capacity of KSA is weak !!!!

Nevertheless, KSA can build an edge by focusing its innovation strategy on building capacity, clusters, linkages and an enabling environment

This strategy will create a knowledge based boom in emerging economic cities leading to rapid productivity improvement and fierce competition

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