What’s The Smartest Post-2015 Target for Science and Technology?

The Post-2015 Consensus' fourth set of papers is focused on Science and Technology targets for the post-2015 development agenda.

There is a way to make the poor of this world $500 billion better off, but this solution is rarely discussed - the transfer of technology from rich to poor and middle-income countries as an aid to sustainable development.

The reason technology is so important is that it makes people more productive, so boosting overall economic growth. Not just that but, once knowledge has been gained, it is embedded in society and can be used as a stepping stone for future growth. Countries with a reasonable technical or research and development base are in a better position to absorb and make the best use of more new technologies as they become available.

Therefore, Science and Technology is the focus of our fourth set of research papers examining the best sustainable development targets for the post-2015 development agenda.

Professor Keith E. Maskus from University of Colorado has written an extensive paper on what works and how much good it will do. As he rightly points out, the UN’s technology-related targets are simply too general and bland. Instead, using the economic literature, he puts forward two proposals.

The first proposal is a novel idea to promote technology transfer across nations: increased circulation of skilled labor within ‘innovation zones’. Countries that agree to be part of these zones would allow some skilled labor to freely move between them for up to 10 years.

If implemented in the Americas, a 5% increase in skilled migration would mean an extra 136,000 managerial and technical workers migrating. They would earn $15 billion more over the next 25 years. Moreover, as they would bring with them new ideas and concepts, they will increase productivity in the US and elsewhere by $1.5 billion. For every dollar spent, this target could do 10-20 dollars worth of good.

With the Americas making up one-third of the global economy, and 20% more visas, the potential benefits could go as high as $500 billion for the entire world. That should make the target of higher labor mobility a strong contender for the world’s next set of goals.

The second proposal is straight-forward: if our goal is to get more technology available for the poor, maybe we should simply increase investment in research and development (R&D), especially in the developing world.

The point is the benefits from R&D do not just go to the company doing it; there are also broader societal benefits as productivity gains occur elsewhere in the economy and other people learn on the job or see the possibility for more innovation. After Apple produced an innovative touch screen on its first iPhone, the knowledge is now available to lots of products in many different areas.

This broader benefit justifies governments supporting research, either through tax credits or direct government spending on research in public institutions. On average, the developing countries spend just 0.2% of their GDP on R&D and perhaps 0.3% in 2030. If we instead aim at 0.5% of GDP by 2030 and 1.5% for emerging economies, this would naturally increase the direct government costs, but it would also increase the long-run technological innovation and capabilities. The models estimate in total, that for every dollar spent, we could likely end up doing $3 worth of good. That is not bad.

In addition, Maskus’ analysis has been peer-reviewed in two perspective papers, the first by Kamal Saggi, Professor of Economics at Vanderbilt University, and the second, by Pamela J. Smith, Associate Professor of Applied Economics at University of Minnesota

Kamal Saggi generally agrees with Maskus’ findings on research and development targets and innovation zones. However, he highlights another fruitful policy area not discussed in Maskus’ analysis: encouraging foreign direct investment. Multinational companies, argues Saggi, have a large role to play in increasing research and development funds to developing countries. As with Saggi, Smith is also generally supportive of Maskus’ analysis. However, she provides a broader discussion on the factors that influence growth and transfer of technology including the channels of transfer and what developing countries can do to support innovation. Smith also confirms Saggi’s point on the importance of foreign direct investment.

Manuel F. Montes, Senior Advisor on Finance and Development at The South Centre and Padmashree Gehl Sampath, an expert on innovation and development issues provide short viewpoint papers which add another layer of review to Maskus’ work.

You can read the full set of reports here.