Technologies is the leader of the enterprising globe. And it leads utilizing a constitution. In contrast to the regular political structure, this constitution is Algorithms written by engineers, scientists, and so on and not congressmen and politicians.
The international competitors is largely who has the finest technical group to create the finest one particular in this case, Algorithms, that comprise of patents, technical processes, tools, and so on. As a nation develops, adopts, applies and diffuses appropriately the contents of this constitution, it elevates the lives of its citizens. The far more innovation a nation pursues, the far more it refines this constitution.
Economists have shown a correlation amongst Expertise Economy Index (KEI), productivity and regular of living. The challenge for any nation is to strengthen its KEI quantity. Carrying out that requires great education, financial regime and other variables that assistance to strengthen technologies capability.
The age of all-natural sources dominating international commerce and market is gone. What matters now is building expertise and applying it. Some nations will make, other people will merely consume. But wealth is concentrated at the inventive stage and nations that concentrate on consuming, without having building technologies will not prosper.
Even with abundance of all-natural sources, which in numerous situations, the consuming nations can not independently approach without having the expertise partners will not alter this trajectory of restricted national wealth without having technologies creation.
On this basis, I separate the two layers exactly where nations use and compete with technologies as upstream and downstream layers. It is like a two layer pyramid exactly where the downstream is at the bottom with the upstream seated on prime. What occurs right here is that some nations concentrate on the downstream layer even though other people combine each the downstream and upstream layers.
The most sophisticated nations combine the two layers as they seek international competitiveness. They supply technologies roadmap that appears at the future and have plans to take benefits that technologies brings. They make and create factors and in the 21st century are classed as expertise driven economies. In these nations, there is organizing for continuity and technologies succession.
For the other nations, typically building, they compete at the technologies pyramid mainly at the downstream layer. They lack the know-how to make factors and commercialize technologies intellectual properties. The nations are not driven by technologies, rather commodities. They are prone to trade shocks and are typically economically non-vibrant. They fail to make wealth utilizing technologies and participate in the pyramid as shoppers or prosumers.
Let me illustrate utilizing Nigeria exactly where they speak the language of petroleum. In the petroleum market, there are the downstream and upstream sectors. Though the upstream focuses on exploration of crude oil, downstream does the distribution and advertising.
The income is in the upstream sector, a key cause we have the foreign partners concentrated therein. That is exactly where the expertise creation is performed and utilized in the market. I am cautious to say, without having the expertise partners in Nigeria, assisting to discover this crude oil, Nigeria can not mine this solution. Verdict: the oil will be there and of no tangible financial use.
This will stick to a pattern exactly where villages have water underneath them but no drilling experience to harness the water for cooking and drinking. That is the dilemma of anchoring national method at the downstream level. It lacks inventiveness.
In Africa and numerous building nations exactly where ICT has been embraced, they hardly ever know that there is far more worth than what ICT provides them. Confident ICT has helped numerous building nations to strengthen their small business processes, tools and individuals. They are so excited on the powers of faster and more rapidly communication. They savor the wonders of e-mail, Online and mobile telephone and numerous far more. These experiences are mainly on advertising, distributing and installation of these ICT systems. They hardly ever make them and can only play at the downstream layer.
There economists point out repeatedly the innovations ICT has brought to the economies. I agree, ICT is wired for innovation in so numerous places. Nonetheless, the great news is that there are far more rewards up in the pyramid if you move up to the upstream layer. By not building technologies, our techno-financial rewards are restricted and this will not alter till we move up the pyramid.
Although this point can be illustrated with any technologies, I will use the ICT since it is typical and familiar to individuals. I have currently illustrated the point in the petroleum market exactly where numerous building nations rely on petroleum refining technologies of the created nations to extract the oil. Even if they create technologies for the distribution, the upstream thought will triumph. Nations make far more income to license technologies at the upstream level compared to the downstream.
Back to ICT, the upstream level will involve designing computing systems, cellphones, routers, device drivers, and all other infrastructures that allow ICT revolution. As an alternative of importing the most recent cellphones, we will consider how to style them. In 80% of the building nations exactly where mobile technologies is utilized, much less than two% of the technologies are made and manufactured there.
Yes, there are organizations that distribute and sale these gadgets and make marginal income. They can import a laptop from China at $500 and sell to their consumers at $650. Since the barrier to entry is so weak, the margins are smaller. Absolutely everyone is promoting and there are shops absolutely everyone. They are technologies firms to their nations since they can load the computer software and configure the networks and get the laptop operating.
Examine that with giants like Intel and AMD that take a piece of sand (silica) and approach it. At the finish, that piece of sand of say a $1 can be sold for $three,000 since of the expertise involved to transform the sand to a microprocessor. That is expertise and the incredibly finest of human imagination and creativity. It is playing technologies at the upstream level and that is exactly where the worth is.
Nations win at the upstream level since the sale margins are so enormous since the items are niche and in most circumstances revolutionary with couple of players internationally. It is not just the trade or margins. Upstream technologies layer make great jobs, no matter whether in created or building nations. Some of the finest jobs in Africa are in the oil giants exactly where upstream technologies guidelines. You make enviable great jobs for the citizens. They have the income to devote and lift other places of the economy. They hold jobs that bring honor and dignity and they use their brains to shape the globe.
You can make the similar case for Pharmaceutical firms that mix components, compounds, and so on to make drugs. Some of the drugs are seriously high priced but the components are low cost. People today spend for the R&D invested in building that drug. In building nations, they concentrate on advertising and promoting the drugs. As in petroleum, ICT, it is all about the downstream. Why the large Pharma can have margins of 1000%, these entities can barely command six% margins.
So in essence, in this century, there are possibilities for nations. For building nations, if they continue to compete at the downstream layer of the pyramid, they will locate it challenging to move forward given that competitors is generally synonymous with technologies. There is far more threat, far more expertise requirement and far more worth at the upstream. And we require to get there.
How do we do that? Our nations need to have basic adjustments in our national policies on technical education or improved Science, Technologies, Engineering and Mathematics (STEM). That is the answer. I think in expertise and education evolves it. It is about expansion of commitments on microelectronics, nanotechnology, biotechnology, mathematics, chemistry, physics, pc science, engineering, medicine, and so on and inside a generation we can grow to be players at the upstream level of technologies pyramid. And reap that terrific worth therein.