South Asia can become an innovation hub. Here’s how

This article is brought to you thanks to the strategic cooperation of The European Sting with the World Economic Forum. Authors: Andrew Chakhoyan, Founder and Managing Partner, Strategic Narrative Consulting

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South Asia has the potential to become a hub of innovation in the Fourth Industrial Revolution (4IR): with its young population well connected to new global technological developments; opportunities created by the growth of 4IR technologies; and a large, educated labour market.

The rise of emerging technologies like artificial intelligence (AI), blockchain and autonomous vehicles present interesting opportunities to tackle some of the large-scale systemic challenges in South Asia. But a lack of understanding of the technologies, unreliable existing systems, and the fear of the negative effects of these technologies are stifling their adoption.

Here are three ways stakeholders can work together to tackle these problems.

1. Keeping pace with innovation

Professor Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, says that stakeholders need to adopt an “agile governance” model for regulating technology and making constant adjustments with its evolution. Agile teams that constantly evaluate and fine-tune policies to enable the adoption of new technologies will provide a strategic advantage within governments and organisations hoping to thrive in the 4IR.

It is crucial to build stronger links between governments that regulate technology, academia that nurtures new technologies, and industry that builds technology. The following approaches need to be taken to bridge the divide between academia, industry and government, which is hindering the adoption of innovative technology.

Technology Transfer Offices could be set up at universities with the goal of commercializing innovation and facilitating conversations between scientists working on breakthrough research; entrepreneurs building companies involving new technologies; and policy experts that create laws around the adoption of these technologies in society.

Engaging early and developing a continuous feedback loop between the various stakeholders can lead to faster commercialization and a stronger opportunity for governments to fine-tune local regulations for the technology.

South Asia could emulate the system in Europe, where there is significant overlap between Technology Transfer Offices in European academic labs and The European Commission, which creates policy for the EU.

Industry can also play a pivotal role in bridging the divide between academia, industry and government, by helping governments create a roadmap for technological adoption and, in parallel, helping academia develop new curricula to prepare a quality workforce to meet the job requirements of the future.

2. Building trust in technology and being a first mover

Many South Asian countries currently wait for other nations to develop policy and then adapt them for local needs, meaning they risk missing out on a first-mover advantage. The first-mover advantage could generate worldwide interest in the nation as a welcome market for new businesses.

The rise of Crypto Valley in Switzerland is a good example of how government policies have removed regulatory roadblocks to allow a fast-evolving ecosystem of crypto products and services to thrive, fuelled by large amounts of private investment supporting the regulations.

The fears of AI taking jobs, cryptocurrency disturbing the financial system, and autonomous vehicles going rogue, generate more press and public interest than the positive impact these technologies have on the ecosystem.

To avoid a possible backlash and gradually encourage people to adopt 4IR technologies, we need to ensure they are included in regular consultations with experts in the field, policymakers and tech entrepreneurs.

The World Economic Forum’s latest Future of Jobs Report indicates net positive job growth by 2022, after mass adoption of AI across industries. Kenya’s Capital Markets Authority has proposed the creation of a special unit along with the Central Bank of Kenya, to monitor and facilitate a path for the adoption of digital currencies.

Autonomous vehicles, such as drones, are actively being used to deliver critical time-sensitive medication between medical camps in Africa. These are just some examples to highlight the positive side of new technologies that are set to create disruptive change in our lifetimes.

Tech evangelists also need to educate and empower citizens to prepare for the future job market and evaluate the pros and cons of technological adoption for society at large.

New world economies will be built on 4IR technologies, meaning governments need to develop favourable policies for these technologies, in order to remain competitive and prosperous in this new era.

South Asian governments need to consider adopting an inclusive policy approach, to ensure long-term inclusive growth for the region and create trust and acceptance of new 4IR technologies among all sections of society, in order to avoid lower growth rates, unemployment issues and general social unrest.

3. Investing in the future

The 4IR provides an opportunity for South Asia to transition from a low value-added services economy to a strong, R&D-driven products and innovation ecosystem.

With a population close to 1.7 billion, there is already a huge market for innovative goods and services in the region. To enable progress towards an innovation-powered economy, governments in South Asia need to start today by investing a larger percentage of their GDP back into the R&D ecosystem.

There is an immediate need to invest more funds into universities and research labs that are working on breakthrough technologies of the future. The success of the thriving ecosystems for AI in China, healthcare in Switzerland and drones in Israel, are partly due to government spending in these areas over the past decade and an ecosystem that has closely supported researchers and entrepreneurs with grants and collaboration opportunities.

Governments co-investing with the private sector in emerging technologies that are of importance to the nation, can reduce risk and support the private venture capital (VC) sector to invest in high risk – high impact companies.

Effective participation of the VC community to set up and manage such funds, supported by the government through tax breaks and the availability of seed and growth capital for technology companies, will help novel ideas move from the lab to market. It is also critical for banks in the region to support and extend loans to industries and entrepreneurs developing goods and services related to the 4IR.

South Asian entrepreneurs can benefit from large-scale government innovation programmes, such as the European Union Horizon 2020, which brings together the public and private sectors within the EU to collectively support and increase the odds of success for entrepreneurs developing novel technologies to solve global problems.

South Asia has the competitive advantages of a young, educated population and lower median wages than the West. Academia and industry need to invest in their students and employees, by offering relevant training programs to prepare them for the future jobs market.

Governments could help spur innovation and be a strong support system for the manufacturing sector by creating Special Economic Zones for micro, small and medium-sized enterprises with benefits such as import tax subsidies on equipment and infrastructure subsidies for setting up advanced manufacturing facilities.

Industry-specific zones such as the Andhra Pradesh MedTech Zone in India, is an example of how innovation clusters can be a good investment for the future by the governments of South Asia. Such industry-specific zones enable governments to plan training programmes in collaboration with local industry and academia, in order to meet future employment needs in the region.

The technology leaders of the new era will emerge over the next half decade, as various technologies mature and find strong use cases within society. South Asian governments can ensure their citizens benefit by developing a pathway for the commercialization of new technology; adopting inclusive and sustainable governance; and by investing in technologies that will define the future of work for their citizens.

The government’s job is to facilitate, while the citizens’ job is to innovate. There are various stakeholders in this process that need to work together to turn the perception of new technologies from science fiction into reality.

The use of 4IR technologies to leapfrog into a new development paradigm will come from investors taking the risk to invest in deep technology startups; academia stepping out of their comfort zone and pushing for faster commercialization of technologies from their labs; and industry building stronger ties with academia to ensure the workforces of tomorrow are effectively trained in classrooms today.

Finally, it is the role of governments in South Asia to create a favourable environment for this ecosystem of collaborators to thrive.