The importance of invention in economic development

by Amila Muthukutti

Sri Lanka, having eradicated terrorism, is on the track of development. Even though the country has many achievements such as having the highest literacy rate in the region, it has been unable to fully harness developmental opportunities which are natural resources and peace.

There was a time when it was believed that the wealth or the development of a country totally depends on its natural resources, labour force and capital. However, many countries that did not have these, have proved that development can be accelerated and wealth can be created by inventive and innovative efforts.

For instance, Switzerland which has a small population and no natural resources, is not only one of the leading industrialised countries in the world but also ranked at the first place of the Global Innovation Index (GII) in 2014. This tells us a different story. Hence, it is absolutely imperative to widely discuss the role of invention in Sri Lanka's economic development.

Before going into detail, it is important to get an idea of what invention and innovation means. Invention is simply an act of inventing something for the first time. It is a novel idea which came out of the science or technical background.

A patent needs to be obtained, so that the inventor can prove this is a new idea and not copied from any other invention. Making an invention commercial can be called innovation. This has to be introduced as a process in which the invention is turned into a marketable product or service which meets the needs of customers, resulting in profits.

Necessity is the mother of invention, while invention is the mother of economic development. It is up to the Government to create the eco-system supported by the private sector, where inventors can improve themselves.

Developing economies such as ours can never afford to financially support all the inventors. That is why, the role of the private sector has to be emphasised in this regard.

Competition

Several indicators are used to measure the level of innovation in a country among which the Global Innovation Index (GII) is important and recognised. When analysing data relating to the level of innovation in Sri Lanka, it can be seen that the country has gradually gone down in the GII ranking.

Sri Lanka was at 94th position in 2012, 98th in 2013 and was ranked 105th in 2014. We, as a nation, cannot be happy about the rankings, as the nation has lost its ranking year by year. The decreasing ranking clearly reflects the country's inability to create a population with innovative abilities and also poor allocation of resources for research and development (R&D).

It will send a clear signal to investors that this is not the country that they are looking for. We can no longer boast about the literacy rate and free education, as they are unable to attract FDIs in the 21st century.

Being innovative is considered to be a primary factor today for an economy to be competitive. With high market competition, business organisations need to be more innovative than in any other era. Be it a country or a business, the one that spends on R&D and always invents something new, will be the winner in this competition.

When compared to other developing countries such as China, Malaysia, Thailand, and India, Sri Lanka lags behind in the number of innovations and protection of innovations. Innovation is impossible without research. Hence, a private-public mixed delivery system is a must.

The Government ought to take the leadership and encourage private sector companies in this regard. A majority of expenditure on R&D is for the agricultural sector. The country, being an agricultural economy, should not neglect agricultural research. But, at the same time, there has to be a focus on industrial research as well.

The Government can motivate private sector companies by introducing some tax relief for R&D. Proper coordination between universities and private sector companies is essential to accelerate the number of inventions.

Research projects which are funded by the private sector and carried out by universities can deliver better results. The prevailing peace is a boon for inventions.

Sri Lanka has a large number of rural schools that do not have access to science education which can be considered as a primary factor for inventions. With the introduction of open economic policies, the people's innovative mentality seems to have disappeared. However, it is when a country makes more inventions that that country can produce more and export more.

The Japanese economy and most recently, the South Korean economy are the best examples in this respect. If not for Toyota, Honda and other similar innovative companies, its economy would never have been like it is today.

Invention is the mother of economic development, a formula that can be applied in the Sri Lankan context as well.

The writer holds a BA in Economics from the University of Colombo.