Innovation is the best way to make the global economy grow. Hope is pinned on major technology regions around the globe.
But where will these innovations that can trigger the next wave of sustained growth come from? Which ideas will put the global economy back on track? And which regions are actually creating new things? In other words, where are the world’s new hotspots?
The model of Silicon Valley—where technology companies, elite universities and venture capitalists have been working in fruitful symbiosis for decades to create new companies and products—has been copied around the globe, including the Association of Southeast Asian Nations (Asean).
In this context it is unfortunate that the Philippines just dropped 10 places in the global innovation rankings. Based on the results of the Global Innovation Index 2014, the Philippines’s scores and rankings declined in five of the seven main indicators, namely, human capital and research (this needs to be addressed immediately in view of the country’s aspiration in knowledge-process outsourcing/creative industries), infrastructure (not surprising—we need a Department of Information and Communications Technology urgently), business sophistication, knowledge and technology outputs and creative outputs. The country advanced its rankings under institutions and market sophistication.
The index recognizes the “key role of innovation as a driver of economic growth and prosperity, and the need for a broad vision of innovation applicable to developed and emerging economies.” It is worrisome that the Philippines’s ranking in human capital and research dropped; we have to realize the important role of human capital in the innovation process, underlining the growing interest that firms and governments have shown in identifying and energizing creative individuals and teams.
In order to reverse this trend, it may be worthwhile to study the “innovation experiment” of Chile, which was launched in 2010: Chile paid foreign entrepreneurs to come and visit for six months; it offered them $40,000 plus free office space, Internet access, mentoring and networking. And they would get to live in one of the most beautiful places on this planet, where housing was relatively cheap and where corruption and crime were almost nonexistent. All Chile asked in return was that the foreigners interact with local entrepreneurs and consider making the country their permanent home. Chile made a bet that the foreign entrepreneurs would transform its entrepreneurial culture by teaching the locals how to take risk, help each other and form global connections.
The experiment, called “Start-Up Chile,” was such a runaway success that, in October 2012, The Economist dubbed it Chilecon Valley. Santiago is today buzzing with entrepreneurial activity; university students often look to join start-ups rather than big companies; Start-Up Chile has gained brand recognition in innovation circles worldwide; and local entrepreneurs are becoming more ambitious and looking for opportunities abroad. Start-Up Chile has also been flooded with applications—more than 12,000 from 112 countries; 810 start-ups from 65 countries have so far been admitted into the program. The first 199 companies that visited Chile and returned home reported that they have raised a total of $72 million in funding. A batch of 132 companies that chose to stay in Chile reported that they had raised US$ 26 million. Several start-ups have had successful exits and hundreds of others expect to make it big.
There surely are lessons for regions all over the world, including Asean, in Start-Up Chile’s success. To foster economic growth and innovation, the focus needs to be on people. They need to empowered, enabled, and connected!
Henry J. Schumacher
Business & Investment Opportunities
Saigon Business Corporation Pte Ltd (SBC) is incorporated in Singapore since 1994.