INNOVATION POLICIES FOR LEBANON


A SYSTEM APPROACH FOR GAP ANALYSIS AND PRELIMINARY RECOMMENDATIONS


ABOUT

The overall aim of the project launched by ESCWA was to enhance the national innovation system capacity in the beneficiaries countries (Lebanon, Morocco, Egypt, Tunisia , Oman) through updating the related policies and establishing a National Technology Development and Transfer Systems. The objective of BRIC’s report was to set the framework for a National Innovation System in Lebanon and suggest an innovation policy mix allowing Lebanon to manage efficiently the innovation activities, integrate technological and market changes and joining the knowledge era with the aim of securing a sustainable economic growth and social prosperity in a highly risky , uncertain and challenging environment.


DESCRIPTION AND OBJECTIVES

Lebanon has over the past few years — although from a low starting point — made significant gains in the area of innovation due to the vitality of the private sector and the persistent efforts of some civil servants. However, the institutional framework remains to a certain extent relatively weak and underdeveloped. Lebanon is characterized by the presence of a number of independent initiatives and institutions operating according to high international standards, yet they function in a relative policy vacuum as the central government lacks the institutions, the budget, the administrative capacity and even potentially the will to assist. However, due to the sophistication of some activities, the involvement of a large number of actors and the overall complexity and national strategic importance of this issue, it is critical for the Lebanese government to formulate a clear vision and a set of efficient policies that might allow Lebanon to contribute to the global knowledge economy.

Understanding the national innovation landscape is a challenging task, given the fact that many actors, institutions and organizations are involved. One way to deal with such complexity is to start by modeling the situation; this means developing an understandable and accurate representation of reality.

An innovation system can be considered as an agglomerated interaction of private and public organizations that collaborate according to institutional rules and relationships that contribute toward the generation, usage and diffusion of knowledge. In this interaction a variety of actors are exchanging information, knowledge and money through a series of flows and processes.

The Top Down Conventional Approach: Many analysts and experts, when dealing with these issues, start by defining a strategy and proposing a set of recommendations; this approach can be found in many governmental meetings in developing countries. Based on these recommendations a set of policies are designed but rarely are they implemented because of various sociopolitical obstacles. One of the reasons for the failures in such an approach is that the act of designing these strategies is rarely performed at the highest level involving all stakeholders. A second drawback is the difficulty in linking these strategies with the real world situations preventing the implementation of said policies from reaching the goal or vision initially set down by the decision maker.

The Metric Approach: Another approach to analyzing the situation would be what is called the metric or analytical approach. This approach is based on a set of indicators. Benchmarking these indicators with the best practices gives potentially the needed insight to identify weaknesses, gaps and eventually the areas in which efforts should concentrate. This approach can be most useful in a process of monitoring and evaluation of an already functioning innovation eco-system.

In developing countries like Lebanon, directly applying the ‘best practices’ approved by the world’s most prestigious consultancy companies with the aim of improving ranking and indicators like patent numbers and R&D intensity is not necessarily the right path to take. Such an approach risks simply mimicking other nations whose conditions are far removed from Lebanon’s.

In the case of Lebanon, where an innovation eco-system is yet to emerge, we found that a system approach is most suitable. It allowed us to take into consideration the complexity of the national innovation landscape and better understanding the interrelations between the various elements at different levels. This did not mean that metrics, indicators and benchmarking were neglected; rather, it meant simply that the focus was on a system model.


SAMPLE OF FINDINGS

1. Financing options across the innovation chain



Our table showed a clear lack of support for innovation in its early stages.

The most important support for basic research and innovation development projects remains the CNRS. A very important change in policy occurred a few years ago when CNRS moved from a ‘science centric mode of operation’ to be driven now by ‘mission based’ research. During the last few years the entrepreneurship and star t- up communities in Lebanon have become more vibrant. A variety of prizes and competitions have emerged, some sponsored by certain Lebanese investors and others by members of the Lebanese diaspora as well as broader international community. However, these interventions are largely on the level of ‘businesses plan’ competitions with less comprehensive cover for early stage research.

At the market uptake stage kafalat is providing more than $100 million dollars of guaranteed loans. The cumulative amount of loans issued guaranteed is 1.45 billion USD for an average amount of loan for 100,000 USD. The innovative SME World Bank project aims at promoting and investing in innovation, encouraging equity financing and sharing the risk with venture capitalists but is yet to be approved by the parliament.

This project should provide a small proportion of the total amount of the fund; namely, 8% is devoted to the early stages of concept development grants. The remainder being dedicated mostly for the demonstration and commercialization stages.

In sum, this table identifies failures of governance and failures of coordination. There is an evident breakdown of coordination between market and academia. This has led to a capital flow concentration into the upper stages of the innovation process and bottlenecks in early stage research.

2. NETWORKS OF NATIONAL INSTITUTIONS INVOLVED IN SUPPORTING INNOVATION CENTERS IN LEBANON



The network analysis chart reveals two critical points. First the evident disconnect between government agencies, bodies and ministries and the central importance of international institutions endeavoring to work through this disconnect. These institutions provide and promote support for activities of government agencies and bodies. The overall picture is one of inefficiency and poor communication.

CONCLUSIONS

Knowledge and Technology Transfer ( KTT) remains the weakest point of the LNIS Rationales for a set of Policies to Support KTT. More concretely, the key functions to be performed so as to achieve an efficient transfer of technology between the knowledge generators and the market users are the following:

• Initiating efficient communication between the two sides through 1) discussion forums, 2) information exchange platforms, 3) seminars and conferences. These activities help increasing the opportunities to meet and create friendly or professional connections and relationships. It is part of the informal type of initiative that remain instrumental in putting in place strong sustainable bonds.

• Promoting collaboration through 1) associations including researchers and entrepreneurs2) awarding successful collaboration 3) matching funds to initiate seed projects allowing both side to learn how to collaborate and build joint teams

• Building trust through formal agreements and protective measures such as 1) facilitated patenting procedures 2) non-disclosure agreements 3) simplified legal contracts 4) clear licensing schemas. These elements are very important to put in place especially in a country such as Lebanon or any developing country lacking the culture and tradition of strong collaboration between universities and industries, researchers and entrepreneurs.

These elements are the preliminary conditions to establish fruitful efficient and sustainable relationships between the two sides of the NIS namely the supply and demand side.

We also located an important first in funding provision for the early concept stage where entrepreneurs need to develop their ideas into a viable concept and product; the second and third gaps are related to the absence of seed and early stage venture finance, respectively.

Hence the most important recommendation in this respect is to put in place the right financial instruments to support early stage innovation.