6.1 How National Innovation Policy Affects Innovation Performance: Taiwan and Singapore
As mentioned before, the concept of NIS reveals that innovative activity and performance are generated through interaction between various organizations and institutions. It is a process that encompassed by public and private sectors devoting their efforts input into research and development. From system perspective of innovation policy, innovation policy can affect a country’s innovation performance and competence building.
The capability to innovate and to bring innovation successfully to market will be a crucial determinant of the global competitiveness of nations over the coming decade. Most policymakers aware that innovative activity is the main driver of economic progress and well-being as well as a potential factor in meeting global challenges in domains such as the environment and health. Not only has innovation moved to centre-stage in economic policy making, but there is a realization that a coordinated, coherent, and whole-society approach is required (OECD, 1997). Even countries that have generally refrained from active industrial policy in recent years now seek new ways to improve the environment for innovation in order to boost productivity and growth. The national innovation performance is a result of many elements; among these factors, innovation policy is one of the most significant contributors to performance. This section examines the effect of Taiwan and Singapore’s innovation policies on their respective innovation performance.
As small island economies, both Taiwan and Singapore have achieved high economic growth rates in the past while being competitive in science, technology and innovation.
Although both have suffered from the slowdown of economic growth recently, but its innovative capacity remains on the first-tier globally. Taiwan recently has been listed as an innovation-driven economy (WEF, 2009), this is a significant progression that Taiwan owes.
The current innovation policies that Taiwan Government decided on are still concentrating on supply-side policy. On the other hand, the government of Singapore has refocused its innovation policy: from promoting traditional innovative activities to attracting inward FDI forming and growing certain industrial clusters such as biomedical and infocomm industry, that from environmental to supply side. Therefore, the benchmarking comparison of innovation policy and performance between both countries is still significant for its broader implications on other small economies.
Government’s attitudes toward promoting national innovation capacity play a key role in determining the observed differences (OECD, 2007). First, in Singapore, the aggressive
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education policies and huge budget on overall education system give abundant research manpower and a great competitiveness for domestic and MNCs in Singpaore. Singapore has the best primary education in the world (WEF, 2009). The incentive of tax and environment for foreign talents also helps to develop excellent human resource for businesses (Anwar, 2008). Every year, Singapore spends about 20% of its national budget to establish its education system. The budget for education covers primary and higher education, occupational education and on-job training. The well-trained manpower, not only for science and technology, is a key reason that pulls many MNCs to move in Singapore. Moreover, these MNCs even brought advanced knowledge and experience to the local, and created a positive cycle that encourages more knowledge workers and well-developed facilities (Anwar, 2008). The Government considers that entrepreneurship is a key engine for its economic growth and it launched policies which aim to implant an innovative and risk-taking spirit in school education and encourage students start businesses. Successful education efforts could probably be observed as GDP growth rate gradually increases every year except the worldwide financial crisis in 2008, great growth of patenting activities and large amount of inward FDI in Singapore.
Singapore has adhered to a series of policy that successfully constructed many notable clusters in decades ago. These clusters once contributed to increased export and helped Singapore step from a small harbor city into an innovation-driven country. The tax incentives and reliable infrastructure are the main reason for creating clusters in Singapore (Parayil, 2005). Now, Singapore Government bases on successful experience and turns its effort to advanced technology such as biomedical, infocomm and media industry. These industries will upgrade the domestic manufacturers and reinforce the strength of infrastructure in Singapore as well.
Overall, as part of innovation policy, Taiwan’s government has invested significant amounts in research institutions, for research in selected universities, and for the funding of selected firms; these amounts are typically used to develop one industry or technical area that is viewed as having growth potential. The Taiwan Government has chosen to develop high-technology industries, such as integrated-circuit manufacturing and LCD (liquid crystal display) production and recently 6 industries. These industries initially acquired overseas technology (Tsai &Wang, 2005). In order to compete in these industries and to enter new segments, high innovation has been vital. This core concentration on innovation has resulted in strong innovation performance as shown by number of triadic patent families. The results of this innovation policy focus cannot be seen only in the constant patent growth, but in very strong cluster formation and in national development exhibited by long-term industrial growth.
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6.2 Performance Directs Innovation Policy as Feedback: Taiwan and Singapore
The assessment of innovation performance will reveal the pattern of current strengths and weaknesses and perhaps give some idea of how this pattern may change in the future (OECD, 2005).
During a major global downturn in 2008 and 2009, governments and policymakers all tried to find a way to lead their economy to step on a growth path. As a knowledge-based economy, the policymakers have to look back and consider historical policy tract and how the performance is generated, then learn from the past (OECD, 2007). Innovation performance is a result of the whole of the national innovation system, and so the relationship between it and policy is an interaction rather than a one-way effect. Therefore, it is believable that the government would take action to continue the same innovation policy that resulted in good performance or revise it if the contrary is experienced. Here we investigate how national innovation performance directs innovation policy as feedback for Taiwan and Singapore.
Singapore once benefited from its successful inward FDI, cluster formation and well-developed infrastructure including human capital and constructions. Singapore Government basically keeps on strengthening the competiveness in these factors in order to quickly thrive after the financial tsunami in 2008 and 2009 (EDB, 2009). However, the Government is not employing old strategy at all. Singapore is good at deciding a development path and it responses speedily to the trends. The government entered other areas of the economy that it considered appropriate, exerting leadership, assuming risk, and not hesitating to withdraw its support or close down unprofitable companies (Federal Research Division of the Library of Congress, USA). In an economic report published by Economic Report Committee, the Government has decided to follow advises and construct a more open, innovative and entrepreneurship country. Singapore has signed 13 FTA and many framework agreements under ASEAN structure. In the future, Singapore will reach out, continue to attract investment and expand markets. While in aspect of innovation, Singapore designs a set of policy to construct biomedical and infocomm media industry (i2015 Master Plan; Economic Strategies Committee (ESC) Recommendations, 2009). From patenting data mentioned in previous section, Singapore obtains initial performance in these fields according to patent numbers. These selected industries are taken as engines of new economy growth and innovation.
Almost a decade ago, the government of Singapore began to promote entrepreneurship.
However, the unsupportive culture and a traditional education system discouraged the development of entrepreneurship in Singapore. According to the Global Entrepreneurship
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Monitor, Singapore is one of the least entrepreneurial societies in the developed world. In Singapore, people seem to recognize the need for entrepreneurship. They see opportunities in the world economy for new ventures, and much discussion going on to encourage Singaporean entrepreneurs to jump into the growing world market (Tan,2002). In order to create a more pro-entrepreneurship environment, the Government devotes huge efforts to foster entrepreneurship there. There are many resources available to aspiring entrepreneurs:
many Universities and Government bodies have set up institutes to nurture entrepreneurship.
The National University of Singapore has established an Entrepreneurship Centre, and the Ministry of Trade and Industry has the Economic Development Board. There have been many events such as workshops and networking cocktails to foster the movement. Also, many awards programs, from government-sponsored to private, encourage aspiring entrepreneurs to compete and succeed (Tan, 2002).
Taiwan has had strong industrial growth, high patenting performance, and cluster development, which has been the result of interventionist government plans. This positive effect on performance has generally resulted in a continuation of the successful innovation polices developed over the past 20 years. In particular, the strong cluster/industry performance has been attributed to the role of science parks, and thus this policy is still being expanded. However, linkages between universities and firms have been historically weak outside of clusters. For the last few decades, the key to Taiwan’s industrial growth has been strong performance in the high-technology sector; this sector has also been the focus of the government’s national development plans. The Taiwan government’s top-down planning system has been historically important, successful in producing prosperity, and part of the transition of the manufacturing industries’ move toward success in more advanced industries.
Another interaction between policy and performance is education. Taiwan’s performance on education system is weaker than Singapore according to the reports published by WEF and many global institutions. Taiwan Government admitted the situation and launched policies to create world-class universities and research environment.
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