Innovation:Ranked 49thin 2015, Mauritius has regressed to the 75th position in the Global Innovation Index (GII)2018 among 126 countries. Singapore is 7th. Our innovation efficiency has also deteriorated, which means we are getting less out of our inputs and we have some glaring weaknesses too. We are 105th, 93rd and 99th in knowledge creation, knowledge diffusion and research and development respectively.
GII, a benchmark for nations’ innovation capabilities, measures innovation based on a combination of innovation input (that is, institutions, human capital research, infrastructure, market sophistication and business sophistication) and innovation output (that is, knowledge and technology outputs and creative outputs) in a society. Innovation is known to be one of the best ways of creating economic growth, and the stagnancy in R&D investments and the decline in productivity can explain to some extent why we are having problems in boosting growth beyond 4% in the long run.
Productivity: Over the period 2007-2017, in the Manufacturing sector and in the Export-Oriented Enterprises(EOEs), the annual average growth in the compensation of employees has outstripped the average annual growth in labour and capital productivity; the Unit Labour cost in dollar terms has thus been increasing at an average rate 2.2 % in the EOEs over the same period. This has affected the competitiveness of the EOE sector.
The contribution of labor to the 3.8% average annual growth in GDP over the period is 13% and that of capital is 64%. The remaining 23% represents the contribution of TFP- qualitative factors such as training, management, technology, institutions and policies. Most of the expansion was due to capital accumulation, with labour marginally different from the earlier periods, reflecting the capital deepening during this period, while Total Factor Productivity (TFP) making a smaller contribution. Mauritius will have to rely more heavily on TFP growth to sustain economic growth if it is to realize the transition to a high- income high value added economy. Higher total factor productivity growth could be the result of both better allocation of resources in the economy as well as innovations that augments disembodied technological change, that is more of production efficiency. For e.g a higher employment rate of women, better governance and labor market institutions as well as a reduction in the skills deficit and graduate underemployment, will boost TFP and economic growth.
The EDB should consider the present state of ourinnovation and productivity as a matter of urgency. It should set up a taskforce on innovation, with the specific mandate to (a) improve the innovation ecosystem in the country (b) reassess the role and contribution of the institutions and agencies in education and training, research and knowledge diffusion, and (c) re-examine the strength of the overall enabling environment they offer and development of links between various actors within the innovation systems. (Better linkages between teaching and research could be an important factor going forward as presently being endorsed by the University of Mauritius by fully exploiting the National Innovation Fund towards research and innovation excellence in line with its proven Centre for Biomedical and Biomaterials Research)
Our innovation systems should place equal importance to investment in innovation in the form of borrowing and adopting technologies from elsewhere and as well as investment in developing our own unique advantages and addressing our particular challenges. (For example, among others, (1) setting up a SME Industrial Technology Research Institute, patterned along the Taiwan, South Africa and Singapore technology research institutes. It will scour the world for cutting technologies and use its own laboratory facilities to assess their appropriateness to local conditions and build pilot versions to demonstrate them to prospective investors and (2) targeting FDI flows to high-value and technology-driven industrial activities and (3) building our own innovation benchmarks and indicators in different sectors.) Building innovation capabilities takes time; we need to map out the long term investment needed to build the necessary innovation building blocks and to expand its research and innovation footprint. The leadership of the EDB as well as a long term vision are primordial since they provide both focus and commitment, including long-term capability building.
