Download Research and Development R&D

Background
 Research Development and Innovation (RDI) is an
investment in a company’s future
 Highest productivity improvements and hence GDP
growth always came from innovation and this since the
invention of the wheel
 Adapting to fast growing technological innovation is
crucial. In open markets, obsoleteness is a wide spread
disease
 Globalization, open information, and increasing linkages
between Universities and Industries facilitate innovation
and may one day turn it into a commodity
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Remember !
 For Industry, the principal purpose of
business RDI is to develop differentiated
products and services to meet the market
needs
COMPETITEVENESS:
competitiveness is the set of institutions, policies,
and factors that determine the level of
productivity of a country
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Lebanon Scores VERY BAD in Competitiveness Index
The Global Competitiveness Index Ranking for ESCWA Member
Countries covered by the report
Country Rank 2010-2011 (139 countries)
Qatar
17
Saudi Arabia
21
UAE
25
Oman
34
Kuwait
35
Bahrain
37
Jordan
65
Egypt
81
Lebanon
92
Syria
97
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Basic Requirement
Macroeconomic Environment
 Lebanon has successfully maintained a
healthy economy despite the worldwide
economic and financial crisis. (8.7% GDP
growth in 2009 vs. world average of 1%)
HOW CAN WE SUSTAIN IT !?
Basic Requirement
Health and Primary Education
 Good health services exist in Lebanon
 Basic Education is of good quality and
available to all. Literacy rates are improving
 Healthy educated population yields
competitive workforce
 Resource allocation should remain strong for
both sectors in order to sustain
competitiveness
Efficiency Enhancers
Higher Education and Training
 The relatively acceptable higher
education system of Lebanon should
be built on (we score 4.6/7 – still
significant room for improvement)
 “There is no science w/o scientists, there
is no scientists w/o research!”
 Efforts should be made on enforcing
linkages with industry hence economy
(jobs, R&D, etc)
Efficiency Enhancers
Goods Market Efficiency
The country produces a good mix
of goods and services
A wide variety of goods are
traded on the market
competitively
Efficiency Enhancers
Financial Markets Development
 Banking sector is strong, stable, and well
developed.
 Stock market is limited and inefficient
 Access of funds and capital is low (besides
bank loans)
 IPOs, private equity and M&As are very low
 Investment banking is very weak
Efficiency Enhancers
Technological Readiness
 The technological readiness of Lebanon’s
developed industries is average given their
partial ability to use the available
technologies to improve productivity and
efficiency
 The country’s labor force is quite qualified
and needs to be continuously up-to-date;
they have the ability to adopt the available
technologies
 Are we going to produce technology or
remain users?
Efficiency Enhancers
Market Size
 Lebanon’s market size is not limited to its
boundaries
 The market spans to the Arab and European
countries and beyond
 Exports have been growing and are crucial
Innovation and Sophistication Factors
Business Sophistication
 Many sectors have high sophistication
(mature, efficient, profitable, up-to-date)
 Sophistication results also from strong:
o Linkages and openness to the world
o Amount of expats that are still in close contact
with the country
o Out-sourcing, sub-contracting, joint ventures, etc
Innovation and Sophistication Factors
Research Development and Innovation
 Four of Lebanon’s top exporter industrial
sectors namely:
o Electromechanical (about 22% of exports)
o Agri-food (about 10% of exports)
o Chemical (about 8.5% of exports)
o Transportation (about 7% of exports)
…are by nature conducive to innovation
What Research?
Product and Material Research
Manufacturing and Operations Research
Market Research
Product and Material Research
 Find new product ideas to meet customers’
needs
 Research new Materials to develop new
products and processes
 Improve Material performance
 Find new and different products and new
uses of existing products or by-products
Manufacturing and Operations Research
 Development of tools and equipment
 Manufacturing methods aimed at improving
productivity and reducing costs
 Application of information technology for
informed decision-making
 Study of optimal resource allocation
 Predict system behavior
Market Research
 Collection and analysis of market data
o Target market
o Competition
o Environment
 Crucial for understanding new trends
 Very important to analyze competitiveness
Development
 The most economically feasible method for
applying the facts or principles identified
 Carried out typically after applied research
Innovation
 It is the final stage of a development process,
representing the final result achieved and
implemented successfully
 Innovative activities may relate to new
products, new services, new methods of
production, opening new markets, new
sources of supply, and new ways of organizing
 Innovation is directly correlated with the
performance of firms
 Around the world innovation is now
recognized as a prime source of national
competitive advantage
MASTER PLAN for RDI
 A large improvement can be made on one of
the main pillars of competitiveness 
Industrial Innovation
 We recommend a Master Plan involving 4
major players:
o Public Sector
o Universities
o Industrialists
o Banks and Financial Institutions
RDI Master Plan: Public Sector
 National RDI policy with stakeholders led by
CNRS with RDI observatory to measure i/o,
impact, foresight, studies
 Tax incentives for RDI in private sector
(industry, universities, centers)
 IRI facilitation and coordinating industrial
research and innovation
 ALI matchmaker between industry, CNRS,
IRI and universities
RDI Master Plan: Universities
 Participate in national RDI observatory
activities
 Graduate and post-graduate relevant and
connected research
 Develop tracks of research priorities needed
in country (industry, energy, environment,
water, etc)
 Establish graduate schools to offer multidisciplinary programs and activities
 Crediting professional activities by faculty
members towards promotion (consulting,
development, applied research, innovation)
RDI Master Plan: Industrialists
 Include in their business plans an RDI
chapter
 Strategy on % of RDI spending per year
 Conduct state-of-the-art-product research to
confirm need for development
 Conduct extensive market research to
identify consumer needs
 Seek local RDI capacity to solve efficiency
and development problems, build local
expertise over time, hence, multiplier effect
 Ask for help from ALI, CNRS, IRI, and
Universities
RDI Master Plan: Banks and Financial Institutions
 Create Innovation funds (Equity and Loans)
to be invested in spin-offs which resulted
from innovation
 Find strategic partnerships and alliances
Productive or Waste: Importance of Cycles!
 RDI can result from two cycles:
 Market Driven
 Research Driven
 Any flaw from within one cycle makes the
difference between a productive and wasted
RDI
Practical Recommendations
 We should extend the current law of tax
incentives on “Tawzifat Zatiyyeh” related to
CAPEX, to include RDI expenses.
 Industrialists should be ready to have a high
failure rate in RDI projects; however, one
success out of ten failures will largely
compensate all the losses.