R&D

RESEARCH AND DEVELOPMENT KEY TO SUSTAINED ECONOMIC GROWTH
A great deal of focus on the country’s economic recovery and development seem to be centred on attracting foreign direct investment, securing lines of credit and funding as well as helping exporters and indeed this is worthy because these factors constitute a mix that assures of fast and sustained economic growth. However the talk on accelerated growth and development cannot be complete without mentioning things like research and development, democracy, strong legal systems etc. and the fact that these perhaps do not receive due attention could well explain the size of the economy we have. While these factors may not fall inside the realm of economics per se empirical evidence points to these as components of a mix that guarantees economic prosperity and the general improvement of living standards of citizens and as such a similar thrust or approach has to be assumed in dealing with these. Quite frankly a lot of people might find it hard to connect the research and development( hereafter referred to as R&D) and economic prosperity, in fact R&D is such a luxury that rarely will you see a local firm actually budgeting a significant portion of its resources towards this. At national level very insignificant resources or none at all is guided towards this and it’s only fair to say that most of the research and development actually going on here is actually donor funded accordingly amplifying the lack of appreciation of this function’s importance. However what may be interesting is the revealing statistics made available by organisations such as the UNESCO a United Nations agency that tells quite story around this R&D  topic. We are all aware that the United States is the world’s largest economy though not many people would be aware of the US’s R&D spending which is estimated to top $405billion in 2011 alone and that it constitutes about 2.7% of its GDP. These figures are quite staggering but also help people to understand how that country values R&D which inevitably gives it the edge in global trade and that is why sometimes naively so we expect the US to produce the latest technologies, the latest computer software, or even movies. Japan another innovative trading nation is expected to top $144 billion and that roughly equals about 3.3% of its GDP and until recently Japan was the second largest economy in the world. In fact the top 10 list almost resembles the list of the world’s top 10 economies and thus clearly showing that R&D is essential in ensuring growth and sustaining it. One emerging economy that has really embraced R&D and whose results now prove this is China. China according to the same list now out ranks Japan with its spending expected to top $153 billion about 1.4% of its GDP while China recently overtook Japan as the world’s second largest economy and again this simply highlights the co relationship between R&D spending and economic growth. Now it is the story of China’s growth that should help to realign the thinking and comprehension of R&D as the foundation of economic growth by people in the developing economies. Though China is still categorised as a developing economy in some spheres because the fruits of growth have not filtered down to everyone it’s only a matter of time before that happens and certainly by spending more on R&D and prioritising the middle class, China is already setting the tone towards realigning its economy from being an export driven one to a more consumer driven one. In Africa where most developing economies including ours are found R&D has not received its due attention because R&D spending often falls short of the UNDP’s minimum threshold of at least 1%of a country’s GDP. According to the UNESCO R&D list South Africa ranks first on the continent with its spending estimated to reach $3.7 billion which translates to about 0.7% of its GDP on the other hand Egypt ranks second with its spending topping $910 million that’s about 0.23% of GDP and finally Morocco in third with its spending at $760 million which about 0.6% of its GDP. However none of these rank in the world’s top 30 with SA ranking 31^st, Egypt a distant 45^th and Morocco 47^th and there was no other African country on the list perhaps suggesting that there is little or next nothing being earmarked for R&D on the entire continent. Evidently these figures make a strong case for increased funding for research and development not only by state funded or owned enterprises but the private sector as well because it is exactly this sort of expenditure that ensures that our exports compete very well on the global market and help in import substitution efforts. Competitive exports and reduced dependence on imports helps to improve the balance of trade in our favour and in the long term help to reduce the balance of payments deficit something very much akin to African and developing economies. For a lot of African economies the task is quite daunting though not impossible and this because the literacy rates are very low, the educational and skills training facilities are woefully inadequate or underfunded while higher learning institutions like universities and technical colleges are very few. All this coupled with a culture of not willing to learn makes prioritising R&D spending an impossibility hence our poor showing on the above mentioned list. Zimbabwe however may have a head start already because the country ranks highly on the literacy rates and the country has for years spent disproportionately larger amounts on educational facilities than most African countries and of course this cultured need to excel in school that is often instilled at a tender age in most children by their educated parents. What is probably lacking is the funding and the culture of research and developing hence the need to now shift effort towards this. We export mainly primary products perhaps because we do not have the expertise to turn these into finished products thus by having more resources dedicated towards improving or innovation we may be able to reverse this trend and start exporting finished products something that adds value.

Terence Zimwara feedback 0733406743 or tem2ra@yahoo.com
temra-temra.blogspot.com