Innovation
should be increased
to
generate high economic growth
Rusli Abdullah ; A researcher
at the Institute for Development
of Economics and Finance. (Indef)
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JAKARTA
POST, 02 Januari 2015
Innovation
has an important role in economic growth. Most countries with better levels
of innovation and technological development have better economic growth.
On the
contrary, countries with low levels of innovation have worse economic growth.
Human history wrote that technology and innovation encourage high economic
growth for countries that had high innovation. The industrial revolution in
England is an example.
It was begun
from the use of steam power yarn spinning machines that spread from England to
mainland Europe and America. Furthermore, the industrial revolution was
followed by the use of machines in various productions.
The
industrial revolution had an impact on the supply of goods. Goods were
cheaper, more abundant. In addition, the industrial revolutionary made trade
capacity widely available.
The effect of
the industrial revolutionary was wider after the invention of the telegraph
and telephone that connected Europe and America.
The success
of countries such as England, America and Japan proves that innovation
contributes to the growth of the economy. Through the Meiji Restoration that
began in 1868, Japan opened their country from previous self-imposed
isolation.
One of the
policies of the Meiji government at the time was a massive adoption of
technology from the European mainland.
Although
Indonesia has had Law No. 18 of 2002 on the National System of Research,
Development and Application of Science and Technology, the level of
technological development and innovation in Indonesia is still low. This is
one of the explanations as to why the Indonesian economy is still driven by
consumption, rather than by production.
Levels of
innovation in Indonesia can be measured from the proportion of total funding
for research and development (public and private) to gross domestic product
(GDP); the number of patents; the lack of reliable researchers; weak synergy
between relevant institutions (government, universities, industries and
institutions funding research) in the implementation of research.
Currently,
Indonesia is one of the countries with a very small amount of funding for
research, reaching only 0.1 percent of GDP in 2010. This amount did not
change much from the estimated 0.2 percent (of GDP) spending in 2014.
The Japanese
research budget between 2010 and 2014 averaged 3.4 percent of GDP, the US,
2.8 percent of GDP, Singapore ranging from 2.5 percent to 2.7 percent and
Malaysia between 0.6 and 0.8 percent. (Source: Global R & D Funding
Forecast 2011 and 2014).
The number of
patents in Indonesia is also very low, totaling only 409 patents in 2010,
compared with 50,990 in Japan and 1,361 in Malaysia. In the first ten months
of this year, Indonesia recorded only 76 patents. (World Intellectual
Property Organization).
In order to
increase the power of innovation in Indonesia, the government must facilitate
the flow of technology and the flow of public information needed by
stakeholders consisting of technology developers (academia-A), technology
users (business-B) who are also producers of goods and services, and the
government (G).
The
government’s task is facilitation and regulation of relations between the
developers and users of technology that can be more intensive and more
mutual.
The flow of
technology is the process of technology transfer from technology developers
to technology users and producers of goods and services that is translated
into a form of goods and services. Products and services, as a result of the
application of technological inventions (process innovation), are then
marketed to consumers.
Flow of
technology also runs from the developer of technology to the government. This
process is an effort by developers to obtain legality such as patents and
certification based on the Indonesian National Standards (SNI).
The flow of
technology does not run in a vacuum. It is the feedback from the flow of
public information from the consumers and/or public. Producers of goods and
services see a market opportunity that they then recommend to the developers
of the technology to fill the gap.
The challenge
for the administration of President Joko “Jokowi” Widodo is creating a good
national innovation that accelerates the flow of technology between the
stakeholders by first improving the capabilities of each stakeholder. There
are some efforts that should be made to address these challenges.
First, the
government should increase research funding as a stimulus for researchers.
Second, the government must give incentives for researchers (technology
developers).
It also is
absolutely necessary to increase the flow of technology information from the
developers of technology in the form of new discoveries. The absence of
adequate incentives causes the technology developers to look to other places
or countries that provide higher incentives. No wonder many technology
developers do not return to Indonesia after completing their studies abroad.
Third, the
educational curriculum should be oriented to create innovators not only
workers. Currently, the orientation of education in Indonesia is mostly to
prepare graduates to enter the labor market and not to become entrepreneurs.
Fourth,
educating the public on the awareness of the importance of innovation and of
the use of domestic products, especially products developed for technological
innovation in the country. Fifth, providing tax incentives for products made
from home-grown innovation. ●
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