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Problem +
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The Problem
Australia has pretensions to being a 'clever' country. Furthermore federal and state governments support programs intended to boost creativity,
science, technology and innovation - such as Backing Australia's Ability
and Queensland's Smart State.
Enhanced economic and jobs performance, and other goals (such as a reduced
ecological 'footprint' from growth) can be achieved by a stronger science and
technology (S&T) capability (see
The Economic Role of
Technology). However in practice, though Australia's scientific institutions have been
comparatively well resourced by governments:
- Australia's capability to exploit S&T to gain competitive advantages
through business innovation is weak and apparently declining;
- scientific literacy in the community is limited;
- the schools and universities which need to develop such capabilities are
stressed;
- substantial numbers of children come from family backgrounds that will
make it difficult for them to achieve the education levels needed to prosper
in a truly 'clever' country; and
- the political establishment generally lacks any depth of understanding of
these issues.
The need to give practical effect to Australia's S&T pretensions is made more
necessary by an increasingly difficult trading environment and the emergence of
challenging competition (see
The Need to to Better in Queensland's
Economic Strategy, whose state focus has national parallels).
This document will:
- suggest that Australia's S&T capabilities in
industry, academia and government will not be effective until their
priorities and integration are primarily driven by market demand rather than
by political support for the 'good ideas' of science or industry lobbies;
- outline significant developments over the
past 15 years which do not yet seem to have been fully taken into account in
thinking about developing Australia's S&T capabilities;
- speculate about methods to advance the position of
significant identifiable segments of the community who seem at risk of being
left behind in a more knowledge-based economy;
- mention the author's qualifications for
advancing this proposal.
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Solution |
A Solution
In order to achieve more effective outcomes, the main requirement is for
community leaders to break Australia's tradition of colonial dependency on
authorities and accept 'ownership' of, and take responsibility for, Australia's
S&T capabilities and innovation systems (see also
Upgrading Australia's Economic Leadership).
In particular, civil institutions and / or their
leading members need to:
- shift
their emphasis from lobbying politicians to 'do something to help', and directly take
responsibility for stimulating market-oriented regional initiatives to develop the
elements of Australia's innovation systems (eg scientific /
technological / market intelligence gathering by business; the
management of innovation within firms; financing and commercial support for
entrepreneurs; technology transfer; relationships between business and
research / education / training institutions; business support services such as law, accounting,
logistics);
- establish and finance institutions able to communicate the challenge and
what is being attempted to the general community as well as to the latter's
elected representatives. The functions of those institutions would include:
- raising general awareness of the opportunities available and
what is required to participate;
- highlighting to governments the type of regulatory / tax / public demand regimes which
should encourage an improvement in S&T capabilities and innovation systems.
Current efforts by governments to boost these functions seem very poorly
considered (eg see The Economic Futility of Backing
Australia's Ability 2 and
Commentary on Smart State).
The direct initiatives suggested above would have an appreciable, though not
enormous, cost. Methods whereby such initiatives might be achieved in practice are illustrated by:
- the industry-policy methods used for rapid development of industry
clusters by Japan's bureaucratic elites; trading companies; and banks prior
to 1990 - methods which need to be evaluated in the light of
differences in
concepts of power and governance which are implicit in Japan's cultural traditions;
- the leadership role which banks at the centre of business groups played
under the ordo-liberal economic model which was the basis of Germany's post
WWII economic miracle - methods which also need to be
considered in the light of the effect of the nature of governance expected
under Roman Law traditions;
- the private-public partnerships developed in the US in the 1990s to
strengthen the position of key industry clusters (eg Silicon Valley Joint
Venture Network) - methods which need to considered in the light of the
tradition of business leadership of economic initiatives in US;
-
Developing a Regional Industry Cluster (2000) which describes
a highly generalized method, based on a reasonably successful practical
experiment in the 1980s, to accelerate economic development in the Australian
environment without the process becoming politicized (which would make it
economically ineffective). The process described would need to be adapted to suit
the development of S&T / innovation capabilities;
- Engineering Enterprise
Development Centre Proposal (2002) - a preliminary concept developed
by the Technology Task Force of the IE Aust Queensland - from which a
practical way to 'bootstrap' existing commercial and technological support
for engineering enterprises might have evolved.
It is very likely that appropriate consultation and a literature search and would reveal methods which have proven effective in achieving the above
goals.
Gains can only be achieved if the political
system endorses the general initiative and the types of institutional
arrangements through which direct initiatives might be taken, but is not otherwise involved (eg
in controlling the process, or authorizing special funding to support
proposals). This is because a politically-motivated process will :
- slow rather than accelerate economic change - because of the usual 15
year lag in gaining public understanding of new options, a lag which is fatal
to gaining competitive advantages; and
- degenerate into wealth redistribution rather than wealth creation and
ultimately result in a loss of any realistic sense of direction - by
attracting interests lobbying for government to support them in doing what
they think ought to be helpful in an ideal world. The alternative would
enable those interests to do what their potential customers really want, and ultimately
provide a strong and clear sense of direction for Australia's S&T efforts.
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Complications |
Complications
The above basic concepts were developed around 20 years ago (but were then suppressed in favour
of numerous politically-motivated efforts to develop Australia's innovation systems).
The international environment has changed dramatically since that time - and
these changes require that the basic concepts be reviewed. Significant changes include:
- Japan's relative economic stagnation since the bursting of its financial
bubble around 1990, and the Asian Financial crisis around 1997 - which
demonstrated limitations in East Asian economic / business models (eg see
Understanding the Cultural Revolution);
- the development of the American 'new' economy in the 1990s - involving a
breakdown of hierarchical management into networks which lifted the ability of firms to exploit knowledge advantages, so overcoming
prior concerns about an inability to compete with fast developing economies
in East Asia;
- politically-motivated manipulation of Australia's Public Services
- including trying to
make them more 'business-like' - which eroded their
effectiveness in giving policy and implementation support to governments (eg
see The Decay of Australian Public
Administration);
- many ineffectual politically-motivated efforts to develop Australia's S&T
and innovation systems - including attempts to make universities more
'business-like' which have arguably reduced their abilities to perform their
functions as universities;
- the rapid economic growth of China and India, and their potential not
only as difficult markets but as
tough competitors in medium technology areas;
- economic stagnation and sustained high unemployment in Europe - leading to a
new priority now being given to building competitiveness;
- the emergence of financial imbalances
which put future global economic growth at risk (eg global growth has for a
decade been driven by
credit-based US demand, associated with large current account and fiscal deficits and
foreign debts; while financial institutions in the US's creditor
nations in East Asia are often insolvent);
- the war on terror - which shows how the current global order is fraying
at the edges, and suggests the need for serious reform (eg see
Competing Civilizations);
- breakdown of efforts to develop multilateral trade - and
incipient protectionism (eg in US) because of its inability to date to
demonstrate another set of 'new' strategies to create large-scale high-income job opportunities in
the face of the outsourcing strategies that major corporations have adopted to
boost their bottom line).
Unfortunately despite such changes (and largely because of the politicisation
and consequent de-skilling of critical institutions) there has been little serious
work to bring the understanding of Australia's competitive environment and
appropriate strategies up to date for the past 15 years.
There is however reason to suggest that competitive advantages may still be
derived by the methods suggested above - namely that the critical role which
knowledge now plays in economic growth theories does not seem generally to be
properly understood (see
Probable
Breakthrough in Understanding Economic Development). Thus:
- outside East Asia few recognize the prospect of adding a dynamic element
to the idea of industry clusters whose importance was widely recognized in
the 1990s; and
- in East Asia the methods used to add that dynamic element seem
incompatible with achieving positive financial outcomes - a constraint which
Australia should be able to avoid.
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Maintaining Cohesion |
Maintaining Cohesion
One consequence of the economic reforms (ie market liberalization) introduced
in Australia in the 1980s was that many marginal rural, coastal and
metropolitan communities did not gain the capabilities required for success
in the more competitive environment that was created - and the
political instability associated with the One
Nation phenomenon emerged.
In order to avoid a repetition in developing Australia's S&T capabilities it
is vital that potentially 'left behind' communities be taken into
account. For example:
- rural and regional communities would be less likely to be 'left behind'
if encouraged to develop competitive advantages on the basis of knowledge and
skills associated with globally specialized industry clusters - rather than reliance
on their natural comparative advantages;
- pathways could be developed for disadvantaged groups (say single parent families
or poorly educated adults who may be under-employed) to participate in an increasingly knowledge based
economy.
The fact that bipartisan support appears to be emerging for the reduction of
welfare dependency will clearly help in the latter regard by providing
incentive. At the same time, the direct initiatives
suggested above should increase the demand for more skilled and highly
paid employees (and thus the availability of good jobs and the motivation to
prepare for them).
Pathways into such opportunities might be created by:
- research to identify models which are now working - and thus can usefully be more
widely applied;
- serious efforts to strengthen social (and particularly family)
relationships, and thus increase the support available to individuals;
- encouraging the disadvantaged to take a positive role in helping others (eg
through some sort of volunteering or charity work) - to shift their
self-image from that of dependent victims;
- providing exposure through such volunteering or charity work to (a) basic
work / enterprising skills (b) social interaction with local tradesmen /
professionals / employers and (c) information about educational
/ training opportunities;
- focusing regional business, community and educational organizations on
how they (or their members) can participate in providing such pathways.
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