Innovation is now the key driver of global economic growth, surpassing traditional factors like natural resources or cheap labour. Countries that invest in education, science, technology, and…
Innovation is now the key driver of global economic growth, surpassing traditional factors like natural resources or cheap labour. Countries that invest in education, science, technology, and innovation (ESTI) while engaging the private sector are leading in productivity and competitiveness.
Nations such as South Korea, China, Finland and the US have transformed into high-tech economies through long-term policies that promote innovation. Using the Triple Helix model – linking universities, industries and governments – they’ve built knowledge-based economies. Pakistan, facing low growth and outdated industries, must learn from these models to bridge the gap between research and commerce for sustainable development.
The financial returns from innovation are vast. South Korea’s rise from a war-torn country to the world’s 13th largest economy was driven by investments in R&D and technical education. Its per capita income soared from $158 in the 1960s to over $36,000 today. Aligning university curricula with industry needs and strong private sector involvement, especially by firms like Samsung, were key. Samsung alone invests over $21 billion annually in R&D, showing how private enterprise can power national innovation. In contrast, Pakistan’s private sector R&D remains negligible, hindered by shortsighted government policies and weak industry-academia collaboration.
China’s innovation-led economic surge is perhaps the most striking. From 2000 to 2023, China increased its R&D spending from 0.9 per cent to over 2.6 per cent of GDP, totalling around $470 billion annually – second only to the US. Through targeted state programmes like ‘Made in China 2025’ and aggressive investment in science and technology parks, China has become a global leader in AI, 5G, semiconductors and green technology. Its high-tech exports now exceed $940 billion annually.
Crucially, the private sector is the main driver of this innovation surge, with companies like Huawei, Tencent, and BYD each investing tens of billions in R&D every year. Huawei alone has over 110,000 R&D employees, more than half of its total workforce. Huawei recently announced the development of a solid-state battery that can go up to 3000 km on a single charge and that can be charged within five minutes, the time taken to fill a tank with petrol. Once commercialised, it will change the face of the global automobile industry.
In the US, government agencies such as DARPA, NIH and NSF invest billions of dollars annually in scientific research. In 2023, NIH alone provided over $47 billion in research grants. Many groundbreaking technologies – like GPS, the internet and mRNA vaccines – originated from publicly funded research later commercialised by private firms such as Moderna, Apple and Google. The results are clear: innovation-driven industries now contribute over 40 per cent of the US GDP.
By contrast, Pakistan presents a starkly different picture. Despite a young population, a strategic geographic location and significant natural resources, the country lags behind in nearly every indicator of innovation. According to the Global Innovation Index 2023, Pakistan ranked 88th out of 132 countries, far behind regional peers like India (40th), Iran (62nd), and Vietnam (46th). Pakistan’s R&D spending remains dismally low – less than 0.16 per cent of GDP – compared to India’s 0.7 per cent, Iran’s 0.9 per cent and China’s 2.6 per cent. Fewer than 50 patents are filed annually by Pakistani universities and industry-academia collaboration remains almost non-existent.
The private sector’s role in promoting innovation in Pakistan is minimal. More than 99 per cent of research funding comes from the government, while businesses prefer traditional, low-risk sectors like textiles, real estate, and trade. As a result, Pakistan’s high-tech exports account for less than 1.0 per cent of its total exports, and per capita income stagnates at around $1,500. Moreover, the country is witnessing a severe brain drain: in 2023 alone, over 450,000 skilled Pakistanis emigrated, many of them scientists, engineers and IT professionals.
To build a competitive, knowledge-based economy, Pakistan must adopt the Triple Helix model through bold, coordinated reforms. Universities should prioritise research, entrepreneurship and industry collaboration, with incentives for patents and spin-offs. Rankings must reflect real-world impact, not just publications.
R&D spending should rise to 1.0 per cent of GDP within five years, with tax breaks for private sector investment. A $500 million National Innovation Fund should support key technologies like AI, biotech and renewables. Public procurement must favour local innovation and startups. These steps can help bridge the gap between academia, industry and government to drive sustainable economic growth.
Third, and most importantly, the private sector must step up as a key player in the innovation ecosystem. Pakistan’s large conglomerates should be encouraged or required to allocate at least 2.0 per cent of their annual profits to R&D with the government providing matching funds as an incentive. Much like India’s TATA Group or Reliance Industries, Pakistani firms must invest in long-term technology development, not just short-term profits. Private R&D labs, corporate research centres and industry-funded university chairs should become the norm, supported by government funding.
Pakistan should also invest in innovation infrastructure. Special Economic Zones (SEZs) should be expanded into full-fledged Technology Innovation Zones (TIZs) equipped with high-speed internet, co-working labs, prototyping facilities and venture capital offices. Strategic sectors such as clean energy, pharmaceuticals, and food security should be supported through targeted ‘technology missions’, similar to India’s National Missions in space and digital technology.
International collaboration will be crucial. Pakistan should form ‘Quad-style’ partnerships involving Pakistani industries and universities partnering with Chinese industries and universities for the manufacture and export of high-tech, high-value-added products, as outlined in my previous article in this newspaper. The Pakistani diaspora, particularly scientists and entrepreneurs, should be invited to mentor startups, invest in innovation funds and collaborate on research projects.
If Pakistan can make this transition, it has the potential not just to lift millions out of poverty, but to emerge as a serious player in the global knowledge economy. For this to happen, we need a motivated technocratic government.
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