Nepal, land-linked with emerging world giants and possessing abundant resources, has tremendous opportunities for development. Given the resilience, unity, empathy, hard work and dedication demonstrated by Nepalis post-quake, this is the right time to build the country as a development-friendly destination.
Apart from natural resources, Nepal has other non-tangible assets and prospective human resources. The private sector and the society are willing to take a lead, identifying what's needed. Other stakeholders have also demonstrated their capability in science, technology and innovation (STI). A few firms such as Lotus Holdings and Cloudfactory, to name a few, now export high-value technology. Researchers in Kathmandu University and Tribhuvan University, and in research institutions such as Nepal Academy of Science and Technology (NAST) and National Agricultural Research Centre (NARC) have also been highly innovative.
The government has given due importance to the STI, initiating programs in information and communication, and renewable energy in particular. However, there are bottlenecks in the national innovation system (NIS). NIS serves as the key driver to rapid economic development in countries like Japan, Korea and emerging economies including China and India. It is a systemic approach that stresses vigorous interaction among industry, academia and the government.
Nepal's anemic industrial sector has failed to generate lucrative jobs. The result is brain drain. On the flip side, firms are short of skilled labor. They are unable to add value to products and services to raise their profit. This has become a vicious cycle. There is lack of dynamic interaction among stakeholders to address this problem. The relevant actors' inability in resource management—finance, human resource or technology—has made things worse. Many actors and institutions are too weak to sustain innovation and face global competition.
Another culprit is the official development assistance (ODA), in the form of grants, short-term and long-term loans. Only a handful of such assistances have augmented innovation system. An example could be the "Micro-Enterprise Development Program" (MEDEP) run by the United Nations Development Program, which has generated many new local jobs through entrepreneurship in rural areas.
What Nepal needs is not thousands of tons of fish, but the knowledge on how to catch the fish so as to discourage import-oriented "consumerism" and promote export-led economic development. There are ample opportunities in sectors like processing industry and ICT. Nepal should welcome investments with "win-win" motto, be it in hydropower, agriculture, tourism, infrastructure development, transportation, or waste management. Nepal can no longer remain content with foreign aid. Rather, it should be investment-friendly, taking advantage of the economic prosperity of its neighbors.
In an innovative system, there are three main constituents: Actors, Institutions, and Interaction. The government, academia, and industry are broadly considered as actors, while established practices, rules and regulations are institutions. There should be well coordinated interactions among actors and institutions.
It is time to act. "Short-termism" should be avoided. Long-term vision and commitment, strategic planning, and coordination, for which institutional strengthening and capacity building will be given precedence, should be adopted. The government, in this process, should bring all stakeholders on board so that public and private sectors become partners in sustainable economic development. The role of the Federation of Nepalese Chamber of Commerce and Industries (FNCCI), the Chamber of Commerce, and other private sector agencies should not be minimized. Coordination among all stakeholders reduces redundancy and enables actors to work together for greater effectiveness.
The industry sector is stagnant because their capability is undermined by stakeholders. Similarly, ineffective governance is the result of donor-driven national goals; or due to unfeasible alternative resources.
The government needs sector-specific targets so that resources can be better concentrated for stimulating industries with such measures as capacity building of STI actors including policymakers; infrastructure support; and strategic business plans.
To transform Nepal, appropriate STI regime ought to be promoted with a holistic use of industry, government, educational system and R&D environment. Government actions and services should result in a dynamic market condition that sustains innovation and promotes competitiveness.
The author is a Research Professor, International IT Policy Program at Seoul National University
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