Innovation elevates productivity by bringing in novel concepts, methods, and technological advancements that contribute to efficacy. That results in higher production from the same or fewer inputs, which is essential economic growth. The World Intellectual Property Organization (WIPO) publishes the Global Innovation Index (GII), which ranks countries based on their innovation capabilities and outcomes, taking into account institutions, human resources, and creative outputs. It has seven pillars that offer a comprehensive framework for evaluating global innovation performance, as well as two sub-indices: Innovation Input and Innovation Output.
In the Global Innovation Index (GII) 2024, the score of Bangladesh reflects a mixed narrative—steady although constrained progress in certain innovation sectors, and systemic challenges in others. In addition, out of the 133 economies, Bangladesh stands at 106 positions. As a result, there is a pressing need to bridge the gap between its desires for economic expansion and the generation of innovative ideas. In addition, Bangladesh ranked 22nd out of 38 lower-middle-income economies. Therefore, it is essential to comprehend the state of innovation in Bangladeshi firms and industries to determine how to get over these challenges and propel forward advancement.
The GII assesses countries using a range of indicators that fall into two primary groups: innovation outputs and inputs. While Bangladesh ranks 112th in innovation inputs, it has performed better in innovation outputs, ranking 90th. This disparity reveals a crucial component of Bangladesh’s innovation ecosystem: although the country can produce innovative ideas, it finds it difficult to establish an atmosphere that encourages long-term innovation.
In addition, Bangladesh is ranked considerably lower by the GII in categories like business sophistication (126th) and human capital and research (128th). These areas are directly related to the aptitude of businesses and sectors to conduct research and development, integrate cutting-edge technology, and create environments that are conducive to innovation. In Bangladesh, industry-level innovation has historically been hampered by a lack of highly skilled workers, antiquated business structures, and inadequate access to capital. To advance the country on the international innovation stage, these limitations need to be remedied.
Additionally, limited participation in global value chains, the lack of R&D partnerships with universities, and an absence of knowledge network integration are the primary hurdles at the firm level. Also, there aren’t plenty of firms that provide formal training and venture capital. Expenditure on research, education, and skill development is still low in Bangladesh.
Access to digital infrastructure is essential for innovation in contemporary sectors, but instead, Bangladesh performs poorly in terms of fixed broadband and 5G access. Digital transformation requires better connectivity, especially as Bangladesh aims to boost its low-level, stagnant high-tech exports. To integrate data analytics, increase operational effectiveness, and link with global value chains, firms require a strong digital infrastructure. Accelerated investment in broadband infrastructure is necessary to ensure that businesses and industries outside of urban regions are not left behind, even if the government’s “Digital Bangladesh” initiative has made an impact. However, furthering this involvement at the corporate level is now a challenge, particularly in sectors like manufacturing, agribusiness, and textiles which are the foundation of the economy of the country.
A potential solution for tackling the disparity involves expanding funding for Industry 4.0 technologies, such as automation, artificial intelligence, and sophisticated procedures for manufacturing. More tech-driven businesses will be better able to innovate, which will boost labour productivity. For instance, firms in the garment industry may leverage automation technology and more advanced digital supply chains to reduce inefficiencies and increase their competitiveness. In a similar vein, agribusiness firms may employ precision agricultural technologies to boost crop yields and resilience, potentially promoting economic growth and innovation.
With a business sophistication score of 126th, Bangladesh requires immediate action to improve knowledge absorption, innovate connections, and stimulate the growth of knowledge-intensive jobs. The nature of the challenges—in so far as they defy short-term solutions—can impede enterprises engaged in more novel forms of research and development, even those seen as most conducive to improving innovation, such as collaborative R&D with foreign or academic partners. The creativity within innovation clusters, and the interplay between firms, universities, and governments is of utmost importance in relation to sophistication. Innovation quilting traditions enable private enterprises to exploit R&D and carry novel innovations successfully. In order to have the best kind of knowledge spillovers, these clusters should specialize in sectors where Bangladesh has a competitive advantage such as digital finance, clean energy and textiles.
The expansion of Bangladesh’s venture capital market is necessary to allow startups and small-to-medium businesses (SMEs) to undertake risks, invest in new technology, and develop. This might create a source of funding for high-growth companies by offering incentives for private equity investment in emerging industries.
With a global ranking of 128th, Bangladesh too has a substantial human capital crisis. Limited funding for education, particularly in STEM disciplines, and a shortage of skilled labour slow down industry innovation. Better education and vocational training are essential to produce a workforce capable of working in high-value industries, research, and entrepreneurship.
Moreover, the problem of missing or out-of-date data, especially in the high-tech, education, and research and development sectors, is a key revelation from the GII 2024 report. This dearth of reliable data makes it more difficult to accurately evaluate Bangladesh’s capacity for innovation as well as for businesses and governments to identify those areas that need adjustment. A more robust innovation ecosystem can be fostered by making well-informed policy decisions, which will require strengthening the data infrastructure.
In addition, Bangladesh’s 108th-ranked institutional quality emphasizes the necessity of changing regulatory frameworks to foster an atmosphere that is more conducive to business. Businesses frequently encounter administrative roadblocks and a lack of well-defined, uniform policies that foster creativity. Innovation potential in businesses could be greatly increased by streamlining the patenting and intellectual property protection processes, cutting red tape, and improving governance.
The GII 2024 provides a road map for Bangladesh’s transition from small-scale innovation enhancements to becoming a regional innovation leader. Firms and industries in the country need to work more to encourage innovation, even though they are efficient at transforming innovation inputs into outputs. This will require higher R&D expenditures, more sophisticated business operations, and a workforce skilled to use new technologies. By utilizing sectoral strengths and addressing structural shortcomings, Bangladesh can realize its full innovation potential. Ultimately, this would improve the country’s long-term economic growth and competitiveness globally.
This article was first published in the November, 2024 edition of the Thinking Aloud
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