Monday, February 13, 2012

In Pursuit of Innovation

What makes developed countries richer than others? Businesses and governments of developed countries spend billions on research and development funds attempting to invent new technologies. These funds end up with us using smart phones, and watching flat screen TVs. Although the knowledge revolution is giving to us an opportunity to raise living standards it is also raising risks that developing countries may fall behind.
“The world is divided into two kinds of people: those who make innovative products and those who just buy them at high prices” says Dr. Ts.Davaadorj, Director of the Information and Analytical Service at Office of National Security Council of Mongolia, during the discussion entitled “Innovation Environment & Technology” which was held last Thursday. “Today, the people who can own technology get richer, while those who can`t get poorer” he added. What happens with Mongolia then?
The fact is that Mongolia is now one of the world`s fastest growing economies. “It’s not surprising, as many other resource rich countries feel the same,” says B.Ganbat, Director of Department of Innovation Policy of the National Development and Innovation Committee (NDIC). “However, economic growth and economic development are different concepts.” Mongolia must make the transition to a knowledge-based economy to truly develop.
As of 2010, looking at the total exported products of Mongolia, 83% are produced with non-technological content while only 0.02% are produced with high-tech content. Should we continue exporting natural resources at lower prices and importing end products at higher prices?
“There is a lack of contribution to the science and technology sectors in economic growth,” explains Ganbat. “Our knowledge sector is not improving.” In today’s rapidly developing world, adopting a knowledge-based economy and investing in intellectual properties has become one of the most efficient ways to utilize capital. It is encouraging that the Government has started paying attention to this and has adopted the Master Plan of Science and Technology 2007-2020.  As a result, in recent years, science expenditures have increased significantly. In 2010, the science sector budget expenditure was 14 billion MNT, twice higher than in 2007. More than 460 science projects have been implemented. So, could we conclude that the innovation environment is getting better?
According to the Law on Science and Technology adopted in 2006, the word “innovation” is described as, “a transformation of the results and products of researchers and introducing the end products to industries and services.” However, Government funded research often stops, fails, or makes no progress. It is really sad to see so many great ideas not reach the market place. The Intellectual Property Office of Mongolia had registered only three new products in 2010. Why we can`t create innovative products? “The state is not innovative itself” says Ganbat. For instance, although the Law on Innovation has been discussed since 2007, it`s not adopted yet.
The Ulaanbaatar Songdo Hospital completed n agreement with the Ministry of Health in order to establish a cord blood bank. “Mongolia has great potential to develop stem cell therapy,” says Dr. B.Boldsaikhan. “But we made a mistake, as we have no experience completing such an agreement. We recognized that the Ministry becomes the property owner of our idea”.
The fact that the Government becomes the owner of inventions made with budget money worries researchers who must invest their time and energy to come up with new technologies. When compared to other countries, it appears as if the science and technology sector activities of Mongolia are funded solely by the Government budget. And it is extremely difficult for Mongolian researchers to raise money as venture capital is not introduced and developed.
“We are creating a design for a 4G wireless chip and trying to involve businesses in that project. But we face lots of barriers as the significance of the innovation process is not recognized by Mongolian businesses. We don`t want to get Government support, because they might cause problems with patents” says Ch.Lodoiravsal, Director of School of Information Technology at National University of Mongolia. As we can see, the Government could support the innovation not by subsidizing new technology but by guarding it.
“We want the right to market and sell our inventions. We need the legal environment to have a patent on what we make. That`s all we want from the Law on Innovation” echoed representatives from Universities.
“Most importantly, the Government should wake up the society. Mongolians must recognize that it is a big business” says Davaadorj. Of course, the private sector wants to jump from using older, less productive technologies to the most productive, cutting-edge technologies. However, many prefer to import advanced technology from abroad, rather than invest in innovation that may fail. If many good products and technologies are already ready, should we waste money and time trying to make the same?
“We are not talking about making, for example, a satellite domestically,” explains Ganbat. “We need to make what we can and what is important for us”. That`s the principle ‘Make some, buy some’.
The NDIC has set priority directions for Mongolian science. These are medicine, energy, construction, agriculture, IT and, of course, deep processing of raw materials.
“We need to combine efforts in some directions with future prospects in order to get a synergy effect,” pointed out Lodoiravsal. “I hope that the time will come when Mongolians will compete on global markets with chips.”

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