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হোম > Asian Innovation Ecosystem
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Asian Innovation Ecosystem
Asian Innovation Ecosystem

The new generation of business, civil society and political leaders are transforming the Asian Innovation Ecosystem, which is a crucial topic for economic and social development. This is also true for Bangladesh, one of the fastest-growing countries in Asia, but which still relies heavily on agriculture, textile, garments, pharmaceuticals and construction as the key pillars of the national economy.

Sustained economic development requires diversification, which is precisely where innovation plays its role contributing to economic prosperity and to social cohesion. Indeed, these two objectives cannot be divided if a government is to deliver increased welfare to its people.

The contribution of innovation and entrepreneurship to economic prosperity has grown with the shift of the global economy towards a mode of production in which knowledge has become a key input. The challenges of the knowledge economy originally interested the most advanced economies, but are now critical to growth in emerging economies as well. Vigorous entrepreneurship and Small and Medium Enterprise (SME) development are among the most important conditions for successfully meeting the challenges.

Over long spans of time, economic growth and the associated improvements in living standards reflect a number of determinants, including increases in workers' skills, rates of saving and capital accumulation, and institutional factors ranging from the flexibility of markets to the quality of the legal and regulatory frameworks. However, innovation and technological change are undoubtedly central to the growth process; over the past 200 years or so, innovation, technical advances, and investment in capital goods embodying new technologies have transformed economies around the world.

Business innovation has become increasingly open and collaborative, as opposed to the traditional 'closed' in-house innovation model of the Research and Development (R&D) labs of large corporations. This `distributed' model creates new opportunities for small firms, which can benefit from participation in knowledge-based partnerships and networks. This is reflected in current innovation policies that rely a great deal on network policies such as cluster development programmes, collaborative research agreements, university-industry labour mobility, and so forth.

However, the picture is not so pleasant and thinking that all new and small firms are equally innovative would be misleading. Significant barriers hinder the innovation of the average small firm, including access to finance, poor management and entrepreneurial skills, lack of qualified personnel, short-term perspective, limited awareness of innovation needs, etc.

Government policies are therefore needed and these should be based on a sound understanding of how new and small firms innovate. Our experience suggests that what makes these firms different from large corporations in their 'road to innovation' is their strong emphasis on collaboration. Small businesses rely more often than large and established companies on co-operation with other organizations such as suppliers, customers, universities, and public agencies for their innovative activities. Knowledge spillovers, both from public research organizations and other firms, strongly contribute to the innovativeness of small enterprises.


Economic policy affects innovation and long-run economic growth in many ways. A stable macroeconomic environment; sound public finances; and well-functioning financial, labor, and product markets all support innovation, entrepreneurship, and growth, as do effective tax, trade, and regulatory policies. Policies directed at objectives such as the protection of intellectual property rights and the promotion of research and development (R&D), promote innovation and technological change more directly.
Asia’s rise up the global innovation rankings has been reflected in its businesses.Having surged up the leader-board for both public and private innovation, Asia’s next challenge will be ensuring its emerging giants including China and India continue to move up the rankings, while not leaving the lower ranked economies behind.
In innovation, as in most areas of economy, governments play a material role, which is positive and effective. A few of the positives could be the following:

• Expanding higher education for deepening the available talent pool to work in R&D enormously

• Encouraging multinationals to set up R&D centersin which many local graduates could learn the disciplines needed to innovate and to commercialize innovations at scale

• Allowing people to get wealthy. Successful innovation leads to large scale wealth creation.

• Providing access to state funds. For example, many ICT startups could have benefited from state funds.

• Encouraging the development of the Venture Capital (VC) and growth capital sectors.Global and local VC funds could have successfully brought to local entrepreneurs not only capital, but also the experience needed to grow and relevant networks.
Going forward, governments should take on a bigger and more complex role of creating the environment for entirely new industries and solutions in the areas of health, finance, education and transportation, etc. For example, the Government could create the opportunity to play off cities against each other to get the best possible mix of incentives and market access.
Asia is already home to 60 percent of the world’s population. The Asia we knew a decade ago has morphed and in many cases, unrecognizable as the developing region it was previously. The first wave of change saw the emergence of Korea, Japan and Taiwan, followed closely by China and India, due to their massive scale. The latest transformation is occurring in many other Asian countries, mostly attributed to a strong focus on innovation.
The shift however has not been an easy one. There were many challenges; ranging from country policies, availability of resources and cultural issues that had to be overcome to reach the stature it is today.

Unlike the developed countries where much of the changes seen are more organic in nature, the growth in Asia has been more deliberate.At the turn of the millennium, policies of most Asian governments were to stimulate industrialization more than innovation. As a consequence, organizations were not aided nor driven to be innovative. This changed in the past decade, where many governments are seen to be more active in driving innovation in the country.The openness of the governments to collaborate towards spurring innovation within the country is apparent. Coupled with the immature ecosystems that allowed for flexibility, this gave way to innovative approaches in driving innovation in Asia.

The Asian middle class swelled from 525 million in 2009; and is targeted to reach 3.2 billion by 2030, constituting 66% of the global middle class population and 59% of middle class consumption. In the past, Asian markets were not so mature and distinctly separated or even isolated. However, with the extreme growth in middle class spending, markets have drastically grown and customer behavior has changed. With similar alternatives being offered left, right and center, companies are forced to listen more to the specific Asian customer needs, which have influenced market maturity and innovativeness.
Global companies have also shared how their innovation processes have been influenced by these shifts, where, in Asia, 47% of respondents to a study strongly agreed that customers have a much greater impact on their innovation process than in the past, compared with 39% in North America and 38% in Western Europe. This “Asiafication” of demand, as it is called, has become a clear driver for innovation for Asia.

Acting upon this, and realizing the need to be closer to their key customer profile, several large companies have set up innovation centers in Asia. This has helped them better understand the nuances of the Asian customers, ultimately assisting the innovation process for these end users.Corresponding with this change was the shift of the Asian consumer attitude that demanded more, which fueled the Asian innovator’s appetite for risk capital. Currently, not only is there a good amount of Asian capital present, there is also an increased amount of capital flowing from Asia to other regions. The advent of alternate funding options like crowd funding or co-ownership has also been embraced very well in Asia, quelling the desire of the start-ups.

The second lacking resource was talent. The previous outflow and unavailability of talent meant that Asian companies often could not achieve their full potential. This has been combated with extravagant schemes of “brain reclamation”. In 2016, China’s government doubled its budget to 4.4 billion Yuan in its bid to attract more academics and professionals to help nurture innovation back home. Similar patterns are also seen in India, Singapore and Malaysia. This has proved to be valuable, as the talent would have gained valuable experience abroad whilst still understanding the local mindset and culture to obtain optimum results.


In creating a vibrant ecosystem for innovation, countries inadvertently created exciting venues for talent to gravitate towards. In Singapore, true to the label of ‘the melting pot of Asia’, P&G’s new innovation center houses talent from 18 nationalities. The availability of high-speed communication network has also allowed many companies to outsource work globally and not be restricted to talent physically located in the same geographical location.

These features have created a rosier and conducive ecosystem for companies to relocate to Asia. Far from being the risky option for growth, Asia has secured its place as a location of choice for fast growing and dynamic companies.
The cultural differences that have defined Asians for so long might be the biggest challenge yet. The embedded hierarchical approach, strong top-down culture has its strengths and weaknesses. Whilst regularly viewed as counter to innovation, coupled with the right tool for engagement, these traits may serve to expedite innovation initiatives throughout the organization. Enter the technology platforms to facilitate engagement of employees.

A study of the Asian community showed that the most outstanding need for innovation to happen in an organization is the leadership support and trust whilst the largest challenge faced by employees to innovate is the lack of trust and empowerment. Technology-based collaboration tools however appear to empower employees and are able to connect every single individual in the organization. Having a clear direction from the top can transform the talent pool into a powerhouse of ideas and solutions. Knowing how to maximize on the Asian culture could instead spur the organization’s growth.

Innovation is clearly essential for organizations to thrive and Asian organizations, while late to the table, have definitely proven to be a strong force. Whilst tremendous progress has been made on the innovation landscape in Asia, nevertheless, plenty of challenges still remain, and new ones are bound to arise. For many companies, Asia has proven to be capable to rise to the occasion. Governments are putting in the effort. Talent is stepping up. It is now up to the individual companies to strategist how to be part of this Innovation Rise.
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