Turning science & technology competence into economic value

It's well accepted that a majority of global economic output is distilled from technological ideas. However, if there were a linear correlation between science, technology, engineering, and mathematics (STEM) indicators like graduates, research and development (R&D) spending, publications and patents, and economic prosperity, the prescription of making any less developed country a high-income one could have been very straightforward. This is about saving from natural resources and labour trade (capital accumulation) and investing it in STEM education and R&D. Unfortunately, such a correlation has been weakening in many advanced countries. More importantly, hardly, it exists in less developed countries. 

To begin with, we can divide the role of every individual, family, firm, and the government as both producer and consumer. As consumers, we are after improving our quality of living standards or meeting mission objectives by getting our jobs done with more suitable products at less cost.  Hence, we are after better quality products at a lower price. We are also concerned about causing less harm to natural resource stock and the environment. On the other hand, producers are after profit. Hence, producers are pressed with the challenge of creating increasing value from the per unit of resources so that they can generate profitable revenue while meeting consumers' expectations and addressing environmental concerns. How to handle it is a daunting challenge. Among others, STEM ideas are our valuable means to address the conflicting requirements for filling the growing gap between resource consumption and wealth creation.

In the role of producers, we should systematically explore STEM possibilities to improve features of the products we are producing now, add new features, and improve production and delivery processes. To add new products to the portfolio of a producer, the challenge is to invent and reinvent. Furthermore,  competition demands winning the race; as we know, knowing how to run is not sufficient to win the race.

STEM competence should be complemented with systematic ideation capacity in winning strategy in a competitive market to increase the supply of ideas. On the other hand, the government must pursue policies for increasing STEM competence and compelling producers to leverage STEM ideas for profit-making incentives and/or complying with regulations.

Unfortunately, often, we ignore the disconnect between (i) STEM competence indicators, (ii) systematic ideation out of STEM possibilities, (iii) invention and evolution of products and processes, (iv) role of market dynamics in turning ideas into waste or wealth, (v) winning aspiration, culture, strategy and rational decision making in the competition race, (vi) functioning of the market due to the exploitation of STEM ideas, and (vii) the role of public policy affecting both the supply and demand of ideas--functioning of the idea market.

STEM COMPETENCE: According to UNESCO data of 2018, Tunisia tops the rank upon having above 43 per cent of the total number of tertiary graduates pursuing STEM education. Countries with high-density STEM graduates are Germany, Singapore, India, Russia, the UK, the USA, and Brazil. In comparison to USA's 17.9 per cent, 31.7 per cent of students in tertiary education pursued STEM education in India in 2018. As a result, India produced as high as 2,675,880 STEM graduates in 2018. Does it mean that India has been proportionately benefitting from STEM competence in driving economic prosperity? If more than 80 per cent of STEM graduates do not find related jobs in India, how can they turn their competence into economic value? Of course, there could be a question of R&D investment, publications, and patents. Some studies indicate that India has been publishing more SCOPUS indexed scientific publications than Japan. Similarly, China's patent filing is far more than the USA or Japan. Does it mean that these countries have been equally succeeding in economic value creation from those STEM assets?        

SYSTEMATIC IDEATION: Creating ideas out of STEM possibilities seems to be relatively easy. Techniques like brainstorming or idea competition generate ideas like popcorn machines. But the challenge is to come up with those ideas which succeed in ferreting out value from the market. According to some studies, as high as 97 per cent of ideas, even upon having seed capital, are failing to generate profitable revenue within first three years. Other studies are indicating that more than 70 per cent of products are retiring before generating profitable revenue.    

INVENTION AND EVOLUTION OF PRODUCTS AND PROCESSES: In economic value creation, in most cases, ideas must be targeted to improve existing products and processes. Even if we succeed in inventing new means, they appear in primitive form. Those inventions require a systematic flow of ideas. The challenge is to create a cumulative effect of an organised flow of ideas instead of randomly creating them. Such reality demands a meticulous understanding of their evolution and interpretation of the forces behind them. 

ROLE OF MARKET DYNAMICS IN TURNING IDEAS INTO WASTE OR WEALTH: Competition force is vital in growing ideas out of the exploitation of STEM possibilities. Ironically, most of the ideas end up wasting resources.  Understanding the competition force in the form of imitation, replication, innovation, and substitution is quite vital to predict the demand for ideas for sustaining as well as expanding the scope of ferreting out value. 

WINNING ASPIRATION, CULTURE, STRATEGY, AND DECISION MAKING IN THE COMPETITION RACE: Profiting from STEM ideas is not limited to acquiring STEM competence and producing ideas. The challenge is to win the race in the globally connected market to create value out of them. In addition to STEM competence, we need winning aspiration and a culture of perfection, dedication, creativity, and teamwork to win a race. Besides, we need suitable strategy and rational decision-making ability in the midst of uncertainty. In some instances, the strategy requires a synchronized response of firms and the nation as a whole. 

FUNCTIONING OF THE MARKET DUE TO THE EXPLOITATION OF STEM IDEAS: STEM ideas are vital means of reducing material, energy, labour, and other input needs and improving the perceived value of our goods and services. To exploit it, the market economy has adopted principles in favour of profit-making competition. Hence, there has been a race in exploiting it in a competitive market.

But this race of the exploitation of STEM ideas often leads to price setting capability, as best performing firms emerge in offering the highest quality at the least cost. As a result, we end up with price setting capability of dominant firms-slowing down further exploitation of STEM competence in economic value creation. Different studies have already found that domestic and international trades have been turning into imperfect markets.        

ROLE OF PUBLIC POLICY AFFECTING SUPPLY AND DEMAND OF IDEAS-- FUNCTIONING OF THE IDEA MARKET: Supply of ideas is not enough. We need to focus on creating the market for STEM ideas. In addition to intellectual property rights, we should also focus on creating the demand. If we pursue subsidies for addressing eroding competitiveness, why should producers risk investment to pursue STEM ideas? It's worth noting that generating profitable revenue from STEM ideas is an extremely challenging task. As long as other windows like tax differential, cash incentives, and subsidies remain open, there will be hardly any demand for local STEM ideas. Besides, the startup thesis out of arranging idea competition, providing seed capital, offering subsidies, and practising predatory pricing is highly erroneous in exploiting STEM competence.   

Often, the STEM competence development agenda takes place in isolation of other pertinent factors-running the risk of suffering from wastage. Despite such a reality, there has been growing investment in STEM education and R&D for the aspiration of creating economic value out of human capital.  Hence, although we are investing in increasing STEM indicators like the number of graduates, publications, and patents, we have very little attention to other essential factors. As a result, the return on STEM investment appears to be highly suboptimal, particularly in less developed countries.

M. Rokonuzzaman, Ph.D is academic and researcher on technology, society and policy.  [email protected]