The Role of Science, Technology, and Innovation in Africa's Growth

The Role of Science, Technology, and Innovation in Africa's Growth [1]

Africa's growth performance remains relatively impressive, growing at 3.3 percent in 2014 up from 3.2 per cent in 2013,[2] driven mainly by improving regional business environment, good governance, sound macroeconomic management, increasing investments in infrastructure, and increasing trade and investment ties with emerging economies . Such growth is also influenced by increasing domestic demand, propelled by the rising middle class, as well as increased private capital flows.

Despite its positive growth trajectory, however, Africa's medium term prospects face a number of internal and external risks. This is because the current decline in oil and commodity prices, slow recovery in the Eurozone and Japan, and the decline in demand for commodities in China could potentially impact Africa's growth prospects negatively as trade weakens. Going forward, Africa stands ready to enhance its productivity through structural transformation and the promotion of industrialization. Hence, central to Africa's future growth prospects is the role of science, technology and innovation (STI).

Why Science, Technology and Innovations

Evidence in the economic literature indicates that science, technology and innovation play a significant role in economic growth. Robert Solow in seminal work in 1956 suggested that the determinants of growth are attributed to capital formation, labour, and a composite including managerial skills and organizational culture that he referred to as "technology." Furthermore, in recent years, productivity has increased in several developed countries, including those in Africa, indicating greater efficiency in the use of labour and capital. The reason for the rise in productivity is explained by the improved managerial practices, organisational change and to science, technology and innovation in the production goods and services. Increased investments in information and communications technology (ICT) have led to improved quality of capital and labour as we witness the rising skills of the average worker in African economies. Technological change obtained through the returns to research and development (R&D) and other knowledge-based investments and spillovers from innovation also contribute importantly towards growth.

Growth accounting is a framework which allows one to account for the determinants of growth by allocating the growth in output to the growth in capital (plants, equipment, and software), the growth in labour, and the growth in total factor productivity (TFP). In principle, growth in TFP stems from improvements in the ways capital and labor are combined in the production processes. Hence the importance of science, technology and innovations in growth. ICTs affect business production processes and productivity and are used in very different ways across industries. For example, ICT is used to improve the supply chains of companies and as well as allow the industries to manage their inventories, purchasing, etc., more effectively. ICT is also used to track changing customer tastes and allow companies to match their inventory mix to stock the right products for their customers. Technology can also be used to improve the  workplace organization and therefore provide very large payoffs in productivity which tends to spur growth. It has to be noted that it takes time to learn how to apply new technologies effectively and that learning takes resources and the augmentation of human capital. The buildup in such knowledge is an investment in intangible capital, and the resulting knowledge stock is part of an economy's intangible capital. The payoff in increased productivity in business operations would take time but would be large enough to significantly improve growth.

The use of ICTs in production also  play an important role in innovations. The diffusion of ICT accelerated after 1995 as a results of applications such as the World Wide. At relatively low cost, these technologies speed up the innovation process and make faster diffusion of codified knowledge and ideas. It also plays an important role in making science more efficient and linking it more closely to business. ICT is therefore enabling many changes in the economy and the innovation process that help make other economic sectors more innovative. Technology diffusion and investment in ICT, supported by  organisational change, offer a strong potential for stronger economic growth.

AU Science, Technology and Innovation Strategy for Africa 2024 (STISA-2024)

Noting the important role of Science, Technology and Innovation for Africa's development agenda, the 23rd Ordinary Session of African Union Heads of State and Government Summit, in June 2014, adopted a 10-year Science, Technology and Innovation Strategy for Africa (STISA-2024). The strategy is aimed at supporting the AU Agenda 2063 which has science, technology and innovation as enablers for achieving continental development goals. The Agenda stresses the diversification of sources of growth and a strong need to sustain the current robust economic performance of Africa so that a large section of people of Africa are lifted  out of poverty. The STISA also calls for the fostering of social transformation and economic competitiveness, through human capital development, innovation, value addition, industrialisation and entrepreneurship.

The STISA-2024 is firmly anchored on six areas, aimed at contributing to the achievement of the vision of the African Union. These priority areas are: (i) Eradication of Hunger and Achieving Food Security; (ii) Prevention and Control of Diseases; (iii) Communication (Physical and Intellectual Mobility); (iv) Protection of our Space;  (v) Live Together-Build the Society; and (vi) Wealth Creation. The strategy further defines four mutually reinforcing pillars which are prerequisite conditions for its success. These pillars are: (i) building and/or upgrading research infrastructures; (ii) enhancing professional and technical competencies; (iii) promoting entrepreneurship and innovation; and (iv)  providing an enabling environment for STI development in the African continent. Due to the cross cutting nature of science, technology and innovations, STISA-2024 is designed to meet the knowledge, technology and innovation demands in various AU economic and social sector development frameworks.

Recommendations

Cognizance that the path of technical development and diffusion is highly unpredictable, it is important a balanced approach is taken in the formulation and implementation of appropriate policies. Given this uncertainty and the gap between the social and private returns to R&D, there is a need for a modest and balanced public support of basic research and other pro-competitive policies. However, among others, Africans may consider the following policy prescriptions:

1. Immediate full implementation of the AU Science, Technology and Innovation Strategy for Africa (STISA-2024).

2. Strengthen research efforts in: agriculture, health, energy, ICT and infrastructure. In this regards investments must be made in  all levels of the education system as well as adequately resourcing research and development at universities.

3. Boost competition, facilitate networking and co-operation, strengthen links between science and industry and increase returns to investment in R&D. Some of the measures could include private and public funding of research institutions.

4. African private sector must be encouraged to collaborate with government and academia on research andensure a more robust, available, and adequately funded system for the provision of extension services, technology transfer agents, and information collection and sharing services.

5. African countries are urged to create science parks as a mechanism to encourage partnership between academia, industry, and government.

6. African countries should create the necessary environment for health competition in the private for innovation to occur. This is because firms invest in innovation and in efficiency-enhancing technology if they can expect sufficient returns and if competition forces them to do so. Competition is also important for driving down the cost of technology.

Many changes are taking place in science and technology policy across the globe. Africa should not stand idle. It has the potential to leap frog and therefore all measures must be taken for Africa to be abreast with the latest scientific findings. Regional integration constitutes a potential vehicle for the diffusion of better policy practices across African countries. It might be necessary for benchmarking of the links between science and industry in different African countries. This will lead to a better understanding of the main barriers affecting the role of science in innovation as well as improved policies in countries. To achieve the tenets of the AU Agenda 2063, African countries should increase their efforts in improving measures towards scientific advances and technological progress, to spur economic growth and social change. While increasing economic growth through science, technology and innovation may not directly address income distributional issues, raising economic growth rates by even a fraction of 1 percent would, with compounding, have profound implications on the livelihood of the citizenry of the continent.

[1]  The views expressed in this blog are those of the author and should not be attributed to the UNECA or the UN at large. Any errors or omissions are solely the responsibility of the author.

[2] This section is drawn heavily from the ECA Economic Report for Africa for 2015.

Joseph Atta-Mensah is a Principal Policy Adviser for the Capacity Development Division, United Nations Economic Commission for Africa (UNECA).

Photo courtesy of Embassy of Equatorial Guinea via Flickr Commons.