North Africa: Routes to boosting innovation and productivity in North Africa

18/09/2014
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In a recent Economic Brief on the subject of North Africa, the African Development Bank (AfDB) analyses what drives innovation and productivity in the countries of the region.

A startling overview

Surprising as it may seem, the aforesaid publication shows that in North Africa, and especially in Morocco and Egypt, the existence of qualified personnel does not seem to have any effect on innovation, nor on productivity. It is a finding that reveals under-use and inefficient deployment of human capital in the countries in question.

Furthermore, exports do not appear to have an effect on innovation. This is no doubt on account of the inflexibility associated with the comparative advantages of those countries, such as labour costs and geo-strategic location. Another factor is that exports are clearly concentrated in sectors of low added-value and limited technological potential, especially in Morocco.

Routes to explore: AfDB recommendations

Neither human capital nor incentives to improve quality in order to capture new markets seem to have had a positive effect. It is in this context that the AfDB is recommending paying special attention to particular aspects of national innovation systems. These include stakeholders in R&D; legal, financial and institutional frameworks; incentivising tools, etc. The purpose, specifically, is to boost innovation and stimulate productivity in North Africa.

Firstly, it would be advisable to strengthen governance in national innovation systems while boosting both the research and business sectors. The aim would be to open up the two areas so that they can interact more effectively and productively. This would involve increased support upstream, for higher education and professional training, in order to improve workers’ skills. With better training and greater added value, it is the workers who will contribute more, and more effectively, to the production and innovation processes in their respective countries.

A virtuous circle: Greater innovation and productivity for more jobs and increased added value

Next, it would be necessary to implement incentivising programmes that are more favourable to innovative foreign direct investment (FDI) with increased added value. These programmes must be properly integrated into the local economy, both upstream and down. For example, contracting mechanisms that have State support could be established in the fields of science and technology, in research centres, universities, local business with innovation potential, and foreign businesses wanting to decentralise their R&D activities. This would make it possible to strengthen cohesion among the various components of a national innovation system based around innovative projects.

Continuing efforts to stimulate innovation and productivity in the region would make it possible to boost the respective economies of the countries involved. This is turn would create more and better quality jobs, as well as improving the quality of life for North African populations.