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Every Country Must Have a National Innovation Strategy

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I have just arrived in Abu Dhabi and have been at the Emirates-Aspen Innovation Summit. It has inspired me, and left me persuaded that what they are doing is incredibly important.

Essentially, the Emirate has recognized that innovation does not translate into economic growth on its own. Government helps. They want to grow, and they have taken it upon themselves to learn the alchemy of policy, institutions, and governmental support which will keep them growing. The initiative is the brainchild of Yousef Al Otaiba, the United Arab Emirates' Ambassador to the United States, a brilliant Georgetown University graduate who has a clear vision of where his country should be going.

The summit is the showcase for a policy of which any country which is serious about developing must take note. Government plays a role in promoting the transfer of technologies from one sector to another, making those connections so that companies can assess whether they want to use them. It also promotes a healthy diversification in product innovation, and encourages industries and universities to link to each other to the advantage of both. Most crucially, it is improving the UAE's image in the world market as a place to do business, invest, work, live and spend money. Business could not do this by itself.

This is just the tip of the iceberg. But the point is: Abu Dhabi is showing countries which want to get richer how to do it. Every country should have an innovation strategy.

The evidence that we have is that, without damaging the vibrancy of free markets, a well-designed innovation strategy can do wonders for a country's development. One of the best examples is Singapore. They decided that they wanted to be the world's leader in life sciences so they invested in the educational resources to do it. And it has worked. Soon they will have 7,000 PhD graduates in the subject. To give you some idea of what an achievement that is, the US has 10,000 PhDs. So a country with roughly the same population as Alabama can now compete with the US as a whole.

In a way, this is just common sense. No country has a monopoly on creative, talented people. But at the same time, no country has a right to keep those people. The creative, talented, entrepreneurial ones are the people who, if they at all can, will travel in search of better opportunities unless their own country can provide them. Britain's brain-drain in the 70's, and Pakistan's sad equivalent today, are examples. These flows are unmoved by the call of sovereignty. Just ask Poland.

And countries cannot turn this situation around without a strategy to do so.

And this, surely, is one of the lessons of economic history. Rich countries didn't get rich because they traded their way from nothing. Their governments also made conscious choices to support the economy with the right mix of institutions and policies. Think Britain in the nineteenth century with its protectionism and then, when it suited the country better, free trade. Think the US in the early twentieth century with the establishment of a central bank, then a controversial step.

The wider lesson is that throughout the development of the rich countries, this has been done in a deliberate, targeted way. Countries supported and protected those activities which bought them increasing returns. To become rich themselves, the countries coming of age now and in the next few decades must learn these lessons, as the United Arab Emirates has shown that it has done.

Every historical example of successful economic growth has relied on certain institutions and public policies. You cannot develop entrepreneurship simply with 'less' government intervention. Of course it's true that bad policy can stifle growth with irresponsible or burdensome policy. But history shows that when government gets policy right, it helps an economy grow. Institutions and policies always matter in technological and economic development.

For the next generation of rich countries, Abu Dhabi is leading the way.

Azeem Ibrahim is a Research Scholar at the Kennedy School of Government at Harvard, Member of the Board of Directors at the Institute for Social Policy and Understanding and Chairman and CEO of Ibrahim Associates.

Follow me on twitter (@AzeemIbrahim)