The innovation economy needs investment – Executive Magazine

Lebanon being Lebanon, there are no statistics. But according to the testimonies of stakeholders across the country’s entrepreneurial ecosystem, a big gap has not been filled: strong financial support from the State for research and development (R&D).

Many governments invest in R&D and the Lebanese government funds the National Center for Scientific Research, which has four study centers in the country and provides research grants on a semi-annual basis. In addition, a small amount ($ 3.2 million) of the approximately $ 650 million in funds intended to develop the entrepreneurial ecosystem and 75% guaranteed by the Banque du Liban (BDL), the central bank of Lebanon, is now devoted to R&D investments. The rumor that a little more of this money could be diverted to R&D in the future is ringing in the jungle right now.

Calculation of yield

In technical terms, the branch of scientific research most likely to generate commercial success is called applied research (as opposed to basic research, which simply seeks to acquire knowledge to do so). Applied research is a question of solutions, and even if companies do not approach it with scientific rigor, they invest in it regularly. An online survey to make a website more user-friendly is R&D, but so is the process that can take years for a diaper manufacturer doing lab testing and experimenting with various materials to create a new product that can contain a little more poop. The latter is obviously more capital and labor intensive.

Innovation is impossible without R&D, but cost is often a barrier.

[pullquote]Applied research is about solutions, and even if companies do not approach it with scientific rigor, they invest in it regularly.[/pullquote]

In many countries, governments make strategic R&D investment decisions to help advance innovation. Moreover, the available evidence suggests that public R&D spending in a given area stimulates more private R&D in the same area.

The exact return to government R&D spending, however, is difficult to quantify. A 2015 article written for the European Commission sought to calculate a state’s return on R&D investment, based on a review of previous studies on the subject. The caveat in the paper’s conclusions is that because surveys of returns on R&D investment have largely only been conducted in advanced economies (i.e. the United States and a few countries Europeans), the results are arThis is by no means true on a global scale nor easy to quantify (there are a lot of messy spillovers, including knowledge). That said, the paper found that the available evidence suggests that governments are achieving a 20% return on R&D spending and increasing private R&D investment by 7%.

In fact, public R&D funding has probably changed the world as we know it. One component of Silicon Valley’s history that is often overlooked is the role the United States Department of Defense (DoD) played in ushering in the digital age. The DoD was an early funder and adopter of microelectronics technology, pushing it towards mass commercialization, which has led to the development of everything from desktops to smartphones and portable devices.

Not a priority

While the World Bank and the United Nations Educational, Scientific and Cultural Organization (UNESCO) collect statistics on government R&D spending as a percentage of GDP, none have data for the Lebanon. Elise Noujeim, Director of the Lebanese National Council for Scientific Research Research Fellowship Program (known by its French acronym, CNRS), says state spending through the CNRS is minimal, but increased slightly in 2017-18. The CNRS grants two-year research grants ranging in value from $ 20,000 to $ 40,000, compared to approximately $ 13,333 to $ 26,666 in previous years.

She says research money can be hard to find for local academics, but believes that “if a researcher has a good proposal, he will find the money.” She notes that the CNRS helps link local researchers to universities and international research institutes, and can often fund the travel and subsistence costs of local academics who may find research budgets abroad.

The CNRS, says Noujeim, is also progressing in its partnerships with a greater number of universities in the country. In 2017, the CNRS signed memoranda of understanding with eight of the 19 universities and hopes that these agreements will strengthen the coordination and cooperation of research activities in the country.

Work together

In terms of existing cooperation and coordination between universities, Dany Obeid, assistant professor at the Faculty of Agriculture of the Lebanese University, and Sophia Ghanimeh, assistant professor at the engineering faculty of Notre Dame University, tell the executive that Lebanon has a do-it-yourself research environment. Funding is scarce and inter-university coordination is personal rather than institutional, which means that academics must take advantage of a network of personal contacts toThings are happening rather than relying on formal cooperation mechanisms between different higher education institutions. Zaher Dawy, Assistant Marshal at American UnUniversity of Beirut, agrees that coordination could be better and admits that research spending in Lebanon is relatively low (although he says that more is getting for every dollar invested, as salaries and tuition fees are lower in Lebanon than elsewhere, so a greater part of the investment goes to research proper).

[pullquote] In 2017, the CNRS signed memoranda of understanding with eight of the 19 universities and hopes that these agreements will allow greater coordination and cooperation in research activities in the country.[/pullquote]

Ghanimeh identified research that requires expensive equipment as particularly difficult to conduct in Lebanon, as research funding is often only in the tens of thousands of dollars. “The money from the subsidies does not allow the purchase of equipment,” she laments. Dawy agrees that cutting-edge research needs cutting-edge equipment and laboratories. And while he praised – but did not quantify – AUB’s investments in medical equipment that researchers and practitioners can use, he noted that few university labs across the country are up to speed. cutting edge technology. Dawy also says the university is in talks with BDL to direct the money the bank guarantees 75 percent for investment in the “knowledge economy” via Circular 331 of 2013 to R&D at the AUB. He refuses to go into details because the discussions are ongoing, but says it’s part of the university’s plan to better integrate entrepreneurship in a multidisciplinary way.

It would not be the first time

Elie Akhrass, director of the UK-Lebanon Tech Hub’s International Research Center (IRC), told the executive that 331 funds are being used to match $ 3.2 million in UK government funding for the initiative, launched late 2016. Akhrass says that IRC is funding applied research on, for example, a portable, non-invasive glucose monitoring device. The for-profit initiative is not time bound beyond the ability to raise and deploy capital.

The Tech Hub itself was initially launched as an accelerator funded by an investment backed 100% by BDL, without UK involvement. The launch of IRC has been part of the Tech Hub monetization strategy for at least 18 months. Akhrass says IRC will monetize by sharing royalties with IP rights holders first, but will address the matter on a case-by-case basis.

Stakeholders Executive interviewed for four months for this article agreed that more R&D spending in Lebanon, whether by state or others, would benefit the ecosystem, as the link between R&D and innovation is so clear. It is difficult to calculate exact economic returns, but as Akhrass says it: “If you want a knowledge economy and a innovation economy, you need R&D.

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