Mind Over Matter Generates Wealth of Nations

In modern economies, land and manufacturing continue to be significant sources of wealth of nations. However, the developed world, with icons like Bill Gates, Steve Jobs, Sergey Brin and Larry Page, is in the midst of a major transformation to accumulation of wealth in the form of intellectual property. In this evolving new economy, there is much greater emphasis on intangible knowledge assets than on physical or tangible assets. The value of the intellectual assets determines the clout and competitiveness of the nations. Wealth generation through creation, production, distribution and consumption of knowledge and knowledge based products are the key characteristics of knowledge economy. The major growth industries such as computer software, micro-electronics, nanotechnology, renewable energy, pharmaceuticals, biotechnology and telecommunications industries derive their strength from the power of the human intellect. These knowledge based industries stimulate other industries in turn to become knowledge based. Until recently capital was a scarce commodity. With rapid globalization and better access to international finance, capital is much less scarce. It is the intellectual assets that are knowledge based, non-replicable, unique and proprietary which are increasingly becoming scarce. Recognizing the importance of such assets, the western nations led by the United States are aggressively pushing for creation and enforcement of laws protecting intellectual property in all parts of the world.

While developing an industrial base is still necessary to build a large middle class and support the growth of intellectual capital, it is absolutely not sufficient. Clearly, the emerging economies, including China, India and Pakistan, require significant investments and efforts to develop human capital to catch up with the industrialized world in this new age of knowledge-based economy. They must start with sharper focus on basic human development through higher investments in nutrition, health and education. At the same, it is extremely important for the governments to pay greater attention to improving higher education and basic research.

Here is an interesting Op-Ed column by David Brooks in today's New York Times titled "The Protocol Economy" that amplifies on this topic:

In the 19th and 20th centuries we made stuff: corn and steel and trucks. Now, we make protocols: sets of instructions. A software program is a protocol for organizing information. A new drug is a protocol for organizing chemicals. Wal-Mart produces protocols for moving and marketing consumer goods. Even when you are buying a car, you are mostly paying for the knowledge embedded in its design, not the metal and glass.

A protocol economy has very different properties than a physical stuff economy. For example, you and I can’t use the same piece of metal at the same time. But you and I can use the same software program at the same time. Physical stuff is subject to the laws of scarcity: you can use up your timber. But it’s hard to use up a good idea. Prices for material goods tend toward equilibrium, depending on supply and demand. Equilibrium doesn’t really apply to the market for new ideas.

Over the past decades, many economists have sought to define the differences between the physical goods economy and the modern protocol economy. In 2000, Larry Summers, then the Treasury secretary, gave a speech called “The New Wealth of Nations,” laying out some principles. Leading work has been done by Douglass North of Washington University, Robert Fogel of the University of Chicago, Joel Mokyr of Northwestern and Paul Romer of Stanford.

Their research is the subject of an important new book called “From Poverty to Prosperity,” by Arnold Kling and Nick Schulz.

Kling and Schulz start off entertainingly by describing a food court. There are protocols everywhere, not only for how to make the food, but how to greet the customers, how to share common equipment like trays and tables, how to settle disputes between the stalls and enforce contracts with the management.

The success of an economy depends on its ability to invent and embrace new protocols. Kling and Schulz use North’s phrase “adaptive efficiency,” but they are really talking about how quickly a society can be infected by new ideas.

Protocols are intangible, so the traits needed to invent and absorb them are intangible, too. First, a nation has to have a good operating system: laws, regulations and property rights.

For example, if you are making steel, it costs a medium amount to make your first piece of steel and then a significant amount for each additional piece. If, on the other hand, you are making a new drug, it costs an incredible amount to invent your first pill. But then it’s nearly free to copy it millions of times. You’re only going to invest the money to make that first pill if you can have a temporary monopoly to sell the copies. So a nation has to find a way to protect intellectual property while still encouraging the flow of ideas.

Second, a nation has to have a good economic culture. “From Poverty to Prosperity” includes interviews with major economists, and it is striking how they are moving away from mathematical modeling and toward fields like sociology and anthropology.

What really matters, Edmund S. Phelps of Columbia argues, is economic culture — attitudes toward uncertainty, the willingness to exert leadership, the willingness to follow orders. A strong economy needs daring consumers (Phelps says China lacks this) and young researchers with money to play with (Romer notes that N.I.H. grants used to go to 35-year-olds but now they go to 50-year-olds).

A protocol economy tends toward inequality because some societies and subcultures have norms, attitudes and customs that increase the velocity of new recipes while other subcultures retard it. Some nations are blessed with self-reliant families, social trust and fairly enforced regulations, while others are cursed by distrust, corruption and fatalistic attitudes about the future. It is very hard to transfer the protocols of one culture onto those of another.

It’s exciting to see so many Nobel laureates taking this consilient approach. North, the leader of the field, doesn’t even think his work is economics, just unified social science.

But they are still economists, with worldviews that are still excessively individualistic and rationalistic. Kling and Schulz do not do a good job of explaining how innovation emerges. They list some banal character traits — charisma, passion — that entrepreneurs supposedly possess. To get a complete view of where the debate is headed, I’d read “From Poverty to Prosperity,” and then I’d read Richard Ogle’s 2007 book, “Smart World,” one of the most underappreciated books of the decade. Ogle applies the theory of networks and the philosophy of the extended mind (you have to read it) to show how real world innovation emerges from social clusters.

Economic change is fomenting intellectual change. When the economy was about stuff, economics resembled physics. When it’s about ideas, economics comes to resemble psychology.


Related Links:

Pakistan's Higher Education Reform

India's Innovation Envy

Pakistani Scientists Working on CERN Large Hadron Collider

Jinnah's Pakistan Booms Amidst Doom and Gloom

Pakistan Conducting Research in Antarctica

South Asians Primary Duty to Children

Food, Clothing and Shelter in India and Pakistan

Teaching Facts Versus Reasoning

Developing Pakistan's Intellectual Capital

Is America Losing Its Mojo?

Facts and Myths in Globalization Debate

Pakistan's Multi-Billion Dollar IT Industry

Digital Maps--Peshawar to Petaluma

Poor Quality of Higher Education in South Asia

Pakistani Military and Industrialization

Pakistani Defense Industry Goes High-Tech

South Asia Slipping in Human Development

Selling Jugaad to the West

Asia Gains in Top Universities

Pakistani Entrepreneurs in Silicon Valley

Venture Investing in India, China and Pakistan

Pakistan Ranks Among Top Outsourcing Destinations

Doing Business Rankings of Countries

Economic Challenges of India by Sean Kelly

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Intellectual Capital Performance of Lahore Listed Companies

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Intellectual Property Organization of Pakistan

Comments

Riaz Haq said…
Here are excerpts of a paper on nanotechnology in Pakistan:

Pakistan stands out well in setting up a nanotechnology center by the Pakistan Council of scientific and Industrial Research (PCSIR), where facilities are for industry to use as well as for conducting R&D that meets industry needs. Its nanotechnology lab facilities are utilized for the development, synthesis and characterization of 12 different nanocomposite coatings used in industries including Orthopedic implants & Surgical, Cutting
Tool, Tool & Die and Textiles. Nanotechnology policy in Pakistan is made by its National Commission
on Nanoscience and Technology (NCNST). “We place our priority in industry development and support.
We have now a fully functional nanotechnology center that focuses on nanocoating, nanomaterials
and nanopowder R&D and industry development”, Dr Shehzad Alam, Director General of the PCSIR of
the Ministry of Science and Technology, emphasized during his presentation.


http://www.nano-globe.biz/News/UNNanoColomboDec09.pdf

http://www.ianano.org/Presentation-ICNT2005/Butt-Nano%20Science%20and%20Technology%20in%20Pakistan.pdf
Riaz Haq said…
Here's a Nation report on Pakistan's rising research publications in international journals:

Pakistan has witnessed, an impressive 50 per cent increase in the number of research publications during just the last two years, going up from 3939 to 6200 in the higher education sector of Pakistan.

This has been the second highest increase worldwide. Scimago, the world's leading research database, forecast that if this research trend from Pakistan continues, then by 2018, Pakistan will move ahead 26 notches in world ranking, from 43 to 27, and for the first time ever, will cross Hong Kong, Singapore and Thailand in Asia. Today Pakistan is publishing more research papers per capita than India.
The number of PhD faculty at our public universities has also increased by almost 50%, from 4203 to 6067 in just the last 2 years alone. This is the result of the HEC PhD scholars that have started returning back and joining universities. These scholars are being selected for pursuing studies at leading universities of the academically advanced countries through a well-defined open, transparent and merit based mechanism.
About 10 to 15 scholars are completing their PhDs every week and are being placed by HEC at the universities under Interim Placement of Fresh PhDs Programme (IPFP). Other HEC incentives include a 0.5 million research grant to every returning scholar. Currently, there are hundreds of fresh foreign PhDs currently inducted into various universities across the country.
The number of PhD students enrolled at the universities has increased by over 40% in just the last one year, from 6937 to 9858 students, while over 28122 students are registered for MPhil/MS, up from 16960, an increase of 65% in just two years.
The increase in the number of PhDs awarded is again very similar, from 628 to 927 in the last 3 years, and will surge exponentially in the future as more PhD faculty and students join the universities.
Commenting on these developments, Dr. Javaid R. Laghari Chairperson HEC said that Universities are the single most important producers of knowledge and research that leads to innovation and entrepreneurship.
By introducing innovation, creativity and interdisciplinary research as a vital component of teaching, and with knowledge exchange programs, the university contributes more directly to the economy and the society than many other institutions in the country.


http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/islamabad/24-Jun-2013/pakistan-becomes-major-player-in-world-research

http://www.scimagojr.com/


http://www.scimagojr.com/countryrank.php?area=0&category=0&region=all&year=all&order=it&min=0&min_type=it
Riaz Haq said…
Here's an excerpt from Time magazine's story (titled The Original Genius Bar) of the Institute of Advanced Studies at Princeton which captures the history of R&D in America:

Founded in 1930 by Abraham Flexner, an educational theorist, and siblings Louis Bamberger and Caroline Bamberger Fuld, department-store moguls who provided the initial endowment of $5 million, the institute was meant to counteract a trend in the U.S. toward applied science. Dubbed an "intellectual hotel" by one director, J. Robert Oppenheimer, it was a magnet during World War II for mathematicians and physicists, including Einstein, who were fleeing the Nazis. The early decades of the institute's history, just before and after the war, coincided with a formative period for science in the U.S., when MIT morphed from a technical school into a place for ambitious research and AT&T's Bell Labs invented the transistor. Men like von Neumann, who created game theory, Oppenheimer, the chain-smoking father of the atomic bomb, and Kennan, an architect of U.S. foreign policy toward the Soviet Union during the Cold War, turned the institute into a hub for academics who had a direct line to Washington. When historian George Dyson was growing up there in the 1950s and '60s--his father Freeman Dyson was working on, among other things, a way to propel spacecraft by exploding nuclear bombs beneath them--he recalls, "If you spilled your food at the table, you were going to hit somebody who could go to the telephone and call the President of the United States."

Today the institute employs 28 permanent faculty members in schools of history, math, social science and natural sciences, along with roughly 200 visiting members who are selected for research fellowships of one to five years. Some 80% of the institute's operating expenses are funded by income from its endowment, which has been supplemented since the Bamberger days by donors including New York City Mayor Michael Bloomberg, a former trustee. (The campus now includes a Bloomberg Hall.) The rest of the operating budget comes from grants from private foundations and the government, mostly the National Science Foundation, the Department of Energy and NASA. As director, Dijkgraaf answers to a board of trustees that includes former Harvard dean Benedict Gross, Carlyle Group co-founder David Rubenstein and Google's Eric Schmidt. The chairman of the board is Charles Simonyi, the billionaire philanthropist and former Microsoft executive who became a space tourist in 2007....


http://www.time.com/time/subscriber/article/0,33009,2147285,00.html
Riaz Haq said…
#China Set to Lead the World in Intellectual Property by Surpassing #US, #Japan #Patent Filings in 2017

http://realmoney.thestreet.com/articles/03/16/2017/china-set-lead-world-intellectual-property

ALEX FREW MCMILLAN

Who says nothing original comes out of China?

Within two years, my adopted home nation is set to surpass the United States in terms of the number of patents its citizens seek, according to newly released data. Already, two Chinese companies lead the world in seeking to protect their intellectual property.

Telecommunications- and networking-equipment maker ZTE (ZTCOY) , based in Shenzhen just across the mainland border from me here in Hong Kong, last year zoomed past its crosstown rival, the telecommunications- and networking-equipment maker Huawei Technologies, as the biggest filer of international patents in the world.

Yes, as a nation the United States took top spot for the 39th straight year running, making up 24.3% of the 233,000 patent applications filed in 2016 under the Patent Cooperation Treaty in 2016.

Japan was next in line, accounting for 19.4% of the filings, and China came in third with 18.5% of the total. For corporate filers, Qualcomm (QCOM) ranked next after the Shenzhen telecom suppliers, with Mitsubishi Electric (MIELY) and LG Electronics (LPL) after that. As a result, Asia accounts for just under half, 47%, of all patent filings around the world.

Digital communications and computer technology are the leading fields for patent protection, with total patent requests for all industries up 7.3% over the previous year. All the figures are coming courtesy the World Intellectual Property Organization. The group just released 2016 stats on patents, trademarks and industrial designs.

On a nation-by-nation basis, it's China -- so often a source of counterfeiting and fakes -- that is driving the growth. The Middle Kingdom's filings rose 44% in 2016 and it has posted double-digit growth in patents every year since 2002. It's a dramatic shift for a nation that wasn't invited to trade pacts such as the Trans-Pacific Partnership, as much because it couldn't abide by its intellectual-property protections as any political considerations.

"China-based filers are behind much of the growth in international patent and trademark filings, making great strides in internationalizing their businesses as the country continues its journey from 'Made in China' to 'Created in China'," the director general of the World Intellectual Property Organization, Francis Gurry, said in announcing the results.

No doubt about it, China has a long history of imitation that verges on forgery. Its artists were encouraged to copy the works of the masters for years before attempting anything so daring as a creation of their own. Confucian society prizes traditional values and deference to elders. And under the Communist Party, it's best to toe the party line rather than get too many upstart ideas about various freedoms.

But China is changing at a pace that is unheralded in modern society. After Deng Xiaoping creaked the door to its walled-off economy open in 1979, promising "Socialism with Chinese characteristics," the country hasn't missed a beat. It has leaped from an agricultural economy of peasants right through an industrial revolution that lasted decades, not centuries, and on into a post-industrial world, at least on the east coast.

Capitalism with Chinese characteristics is more like it. China is communist in party only, and its leaders would frankly prefer if everyone stuck to the business of making money rather than thinking too closely about who they would like to see in charge.
Riaz Haq said…
#China to spend $300 billion to boost #hightech industries for self-sufficiency. Western tech firms worried.
https://www.nytimes.com/2017/03/19/business/china-trade-manufacturing-miao-wei.html?_r=0

Made in China 2025, is designed to juice economic development in emerging industries by providing $300 billion in low-cost loans, research funds and other government aid.

But big companies in the rest of the world worry that the program gives an unfair advantage to homegrown players, with the stated goal of Chinese companies’ owning as much as 80 percent of specific domestic markets in eight years.

China’s minister of industry and information technology, Miao Wei, said the new policy was not meant to wall off the country’s companies from outside competition. Yet he also conceded, without offering specifics, that the plan might need changes.

“We never thought about closing ourselves and doing it only at home, but I think we need some adjustments,” he said on the second day of the China Development Forum, a three-day gathering of senior Chinese economic policy makers with corporate leaders and top economists from around the world.

And while China may want more local suppliers in some sectors, Mr. Miao said, in most industries “we still open up and welcome foreign companies to China.”

The Chinese program plays into the increasing sensitivities over global trade.

While President Xi Jinping of China has trumpeted the merits of globalization, his country has also been criticized for protectionist policies that favor Chinese companies. Adding to the frictions, President Trump has espoused an America First strategy, specifically calling out China on trade and currency.

Western companies fear that the Made in China policy could be used to justify government demands to hand over their latest technology as the price of staying in the Chinese market. They also worry that government-backed investment funds and other resources could be used to acquire many Western companies with key technologies while subsidizing their Chinese rivals.

One of the most contentious parts of the plan is how the country wants to meet Chinese demand with Chinese products. The two main approaches — requiring that a large part of a product’s value be created in China or setting a specific market share for domestic players — are strictly prohibited by the World Trade Organization.
Riaz Haq said…
#China ramped up its #research spending at an avg of 19.5 percent annually from 2003-2013. #tech http://www.computerworld.com/article/3182792/it-industry/5-reasons-why-china-will-rule-tech-2017-edition.html … via @computerworld

1. China’s big science ambitions include a moon base

In the 1950s, the U.S. considered establishing a 12-man Army base on the moon by 1965. The idea was too ambitious for the time and was dropped. Meanwhile, China has set its sights on a permanent lunar base.

2. China wants to win in high-performance computing

U.S. scientists -- including those at the National Security Agency -- believe China will soon lead the world in supercomputing.

“National security requires the best computing available, and loss of leadership in high performance computing (HPC) will severely compromise our national security,” wrote NSA and Energy Department scientists in a recent report.

3. China is attacking U.S. semiconductor dominance

For all its investment and advances, China is at least one and a half generations behind state-of-the-art semiconductors, according to a White House report released in January by President Barack Obama, just days before Trump took office. It was written with industry cooperation.

The report provides insights into criticisms that Trump leveled at China over trade practices. In its push to be first, China isn’t playing fair, the report states.

4. China plans to exceed the U.S. in R&D

China’s investment in R&D is rising so rapidly that the country is expected to surpass the U.S. in overall spending by 2020. This doesn’t necessarily mean that China is doing a better job at innovation. Other measures, such as patents registered in multiple countries, continue to point to the U.S. as the innovation leader.

5. China’s leadership is focused on science

During the campaign, Trump said he supported investment in science, but his proposed 2018 budget cuts science spending.

The cuts are so deep they “threaten our nation’s ability to advance cures for disease, maintain our technological leadership, ensure a more prosperous energy future, and train the next generation of scientists and innovators to address the complex challenges we face today and in the future,” said Rush Holt, the CEO of the American Association for the Advancement of Science.

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