Annual Policy Trends Report for
MEDA countries
Algeria
Egypt
Jordan
Lebanon
Morocco
Syria
Tunisia
Covering period: September 2003 - August 2004
European Commission
Enterprise Directorate-General A publication from the Innovation/SMEs Programme
Innovation is a priority of all Member States and of the European Commission. Throughout Europe, hundreds of policy measures and support schemes aimed at innovation have been implemented or are under preparation. The diversity of these measures and schemes reflects the diversity of the framework conditions, cultural preferences and political priorities in the Member States. The ‘First Action Plan for Innovation in Europe’, launched by the European Commission in 1996, provided for the first time a common analytical and political framework for innovation policy in Europe.
Building upon the Action Plan, the Trend Chart on Innovation in Europe is a practical tool for innovation organisation and scheme managers in Europe. Run by the Innovation policy Unit of DG Enterprise, it pursues the collection, regular updating and analysis of information on innovation policies at national and Community level, with a focus on innovation finance; setting up and developing innovative businesses; the protection of intellectual property rights; and the transfer of technology between research and industry.
The Trend Chart serves the “open policy co-ordination approach” laid down by the Lisbon Council in March 2000. It supports organisation and scheme managers in Europe with summarised and concise information and statistics on innovation policies, performances and trends in the European Union. It is also a European forum for benchmarking and the exchange of good practices in the area of innovation policy.
The Trend Chart products
The Trend Chart on Innovation has been running since January 2000. It tracks innovation policy developments in all 25 EU Member States, plus Bulgaria, Iceland, Israel, Liechtenstein, Norway, Romania, Switzerland and Turkey. It also provides a policy monitoring service for three other non-European zones: NAFTA/Brazil, Asia and the MEDA countries. The Trend Chart website ( provides access to the following services and publications, as they become available:
- a database of innovation policy measures across 33 European countries;
- a news service and related innovation policy information database;
- a “who is who” of agencies and government departments involved in innovation;
- annual policy monitoring reports for all countries and zones covered;
- all background material for four annual policy benchmarking workshops;
- the European Innovation Scoreboard and other statistical reports;
- an annual synthesis report bringing together key of the Trend Chart.
The present report was prepared by Patrick Crehan and Refaat Chaabouni of Crehan, Kusano & Associates. The information contained in this report has not been validated in detail by either the MemberStates or the European Commission.
Contact:
This document originates from the European Commission’s “European Trend Chart on Innovation” (Enterprise Directorate-General).
Copyright of the document belongs to the European Commission.Neither the European Commission, nor any person acting on its behalf, may be held responsible for the use to which information contained in this document may be put, or for any errors which, despite careful preparation and checking, may appear.
CONTENTS
Executive Summary......
1.Overview of National Innovation Systems......
1.1Snapshot of innovation performance......
1.2Innovation governance systems......
1.2.1Comparative overview of national innovation systems......
1.2.2Innovation policy making and delivery structures......
2.Trends in innovation policy......
2.1Innovation policy framework......
2.2Policy events & policy debates......
3.Opportunities for transnational policy learning......
3.1.Learning from good practice: policy evaluation......
3.2How is European innovation policy/performance perceived?......
3.3Potential for transnational learning......
4.Bibliography and sources......
Executive Summary
The MEDA report features Algeria, Egypt, Jordan, Lebanon, Morocco, Syria and Tunisia. These seven countries are part of a larger geo-political block referred to in European policy circles as the Mediterranean partners. Originally comprising 12 countries, two of these have now become EU member states[1]. Turkey and Israel are dealt with in separate Trend Chart Reports and the Palestinian Authority will be dealt with here at a later date.
With the exception of Lebanon the World Bank classifies all of these countries as lower-middle income countries. Lebanon is classified as upper middle income. However, these figures do not do justice to the complexity of the development challenges that are faced in the region.
From the late 1970s until 1995 EU relations with this group of countries was based on a series of cooperation agreements accompanied by financial protocols to support the implementation of socio-economic and infrastructure development projects. Since the Barcelona Declaration in 1995, however, considerable efforts have been made by both the EU and the Mediterranean partners to prepare for the creation of a Euro-Mediterranean Free Trade Zone by 2010. In the wake of enlargement of the EU this Free Trade Zone will comprise a population of about half a billion people.
1. Snapshot of innovation performance
The seven countries fall naturally into three distinct groups. Tunisia and Jordan stand out as having made significant progress over the last two decades not only in the diversification of their economies but also in terms of the development of an infrastructure to support innovation. Algeria and Syria are the only MEDA members to enjoy a positive balance of trade with the EU. However, they also have the least diversified economies and their exports depend almost exclusively on oil, gas and other minerals. Egypt, Lebanon and Morocco have also made good progress in terms of economic diversification and in terms of the development of a National Innovation System. Nevertheless, each is faced with significant challenges that absorb a lot of the time and energy of national government. In the case of Morocco and Egypt the greatest of these are the high levels of unemployment and rural poverty. Egypt also has a huge and unproductive public sector, while Lebanon has been occupied with the rebuilding of infrastructure in the wake of the civil war.
A typical figure for Per Capita GDP at PPP in the EU is EUR 26,920 for France. Ireland has one of the highest rates at EUR 36,360. The following table summarises the situation for the MEDA countries.
Table 1: Basic economic indicators for the 7 selected MEDA countries
Per Capita GDP / Population2002 / Growth Rates - 2002
PPP
2002 (EUR) / Nominal
2002 (EUR) / Average Annual Growth Rate Period 1990 – 2002 (percent) / Population (percent) / Labour Force (percent)
Tunisia / 7,150 / 2,273 / 3.1 / 9,800,000 / 1.2 / 2.4
Algeria / 6,092 / 1,888 / 0.3 / 31,300,000 / 1.5 / 3.3
Lebanon / 4,611 / 4,118 / 3.1 / 4,400,000 / 1.4 / 2.6
Jordan / 4,463 / 1,903 / 0.9 / 5,200,000 / 3.0 / 4.0
Egypt / 4,030 / 1,432 / 2.5 / 66,400,000 / 1.9 / 2.9
Morocco / 4,030 / 1,288 / 0.8 / 29,600,000 / 1.6 / 2.5
Syria / 3,829 / 1,295 / 1.8 / 17,000,000 / 2.5 / 4.0
Source: The population and labour force figures are World Bank Development Indicators. GDP figures are taken from UNDP statistics for the year 2002[2].
Although Lebanon leads by a long way in terms of nominal GDP, Tunisia comes out on top at PPP. These figures are far below EU figures and vary considerably across the region. Egypt and Morocco have highly polarised societies in terms of income. In common with Syria and Algeria they also have large populations of poor people in rural areas. The labour force is growing at a much faster rate than total population. As shown in the following diagrams the World Bank predicts average annual GDP growth for all countries to exceed two percent in the period 2002-2006, with rates for Jordan, Tunisia and Algeria greater than four percent.
Table 2: GDP Growth Prospects in the selected seven countries
Source: These tables are based on World Bank Data. LO indicates the lowest value of average growth rates provided for periods between 1982 and 2002. HI refers to the highest rates in this period. PR is the World Bank projected average annual growth rate for the period 2002-2006. In the case of Egypt this data is not yet available so we use a simple arithmetic average of the known rates for 2002 and 2003. The Tunisian Ministry for Development and International Cooperation provides its own estimates of annual GDP growth of 5.5 percent for the period 2002-2006 in contrast to the 4.7 percent estimate of the World Bank.
Exports of minerals from Syria accounted for 81 percent of export revenues in the year 2000. In the case of Algeria they accounted for 98 percent. Although both countries have a long path to tread in diversification, they both have activities in sectors where they are globally competitive even if export from these sectors is currently very small. Tunisia and Jordan also have a strong dependence on mineral exports. Jordan however has been able to develop strengths in medication and pharmaceuticals. Tunisia is the most diversified of the MEDA group and its largest manufacturing sector is textiles. Although Tunisia under-performs in certain textile sub-sectors it is able to deliver growth in niches of the textile sector that have recently experienced global decline in revenue. Services play an increasingly important role in all MEDA economies. Transport, tourism and travel have experienced strong growth across the region. These are among the few sectors where intra-regional trade is of any significance. Tunisia has started to provide services in areas such as aircraft repair and maintenance. Tunisia and Jordan have a budding software industry whereas Jordan and Morocco provide services to major global construction firms in architecture and engineering design. These are modern economy sectors that in some case correspond to an entry into entirely new areas of economic activity.
Important challenges for the future include economic diversification. This is especially important in the case of Syria and Algeria. All economies face the challenge of developing Research and Innovation policies that are aligned with opportunities for economic growth. The agricultural sector still makes an important contribution to GDP though it is less important as a source of export revenue. Research and Innovation within this sector is important especially in view of its role as a provider of employment in rural areas.
MEDA innovation systems in general comprise two more or less independent systems – a science system and a system for enterprise development. The science systems are made up of national research institutes and universities. Many of these are well established, have a long history in the country and until relatively recently operated more or less independently from any national coordinating body. Most MEDA countries established structures such as national scientific societies or academies of science in the 1970s. Much later they started to develop institutions such as the Secretary of State for Science and Technology. Syria for example created its Secretary of State in 1999 whereas Egypt created its Supreme Council for Science and Technology in 2002. These institutions are still quite young. The MEDA science systems are learning how to prioritise and allocate resources for research, as well as how to design, implement, evaluate and improve national research programmes. The enterprise development systems usually come under the responsibility of the Ministry of Economic Affairs and have no formalised links to the science systems.
The systems for enterprise development in the MEDA have evolved much more recently and more or less independently of the science systems. This process has been spurred to some extent by the EU MEDA Programme that provides substantial funding for enterprise development programmes. Nevertheless progress in the development of efficient enterprise development systems has been slow. There are many barriers to overcome and a need to establish new intermediary structures for programme support.
2. National objectives and policy trends in the country group
Although no MEDA country has published a formal innovation policy paper, elements of de facto innovation policies are being implemented through programmes for enterprise development as well as through programmes intended to support the professional lives of university based researchers.
All MEDA countries are involved with the EU in a process to create a Euro-Mediterranean free trade Zone by 2010. This has pushed industrial restructuring to the top of the agenda to ensure that each country is ready for the challenge of free trade with the EU.
In the past years foresight exercises were implemented in Egypt, Jordan, Morocco and Tunisia. These exercises have provided an important boost to policy in terms of the involvement of stakeholders and the development of a capacity for strategic thinking about the country, its society and its economy as well as the role of science, technology and engineering in development.
3. How is European innovation policy/performance perceived?
An understanding of the role of innovation in industrial growth and socio-economic development has only started to emerge in these countries. The private sector plays an important role in some countries and complementing efforts from government to develop infrastructure for education and business development. In Lebanon’s case this is apparent both in third level education and research and enterprise development. The components of a modern innovation system: business development centres, technology parks, incubators and venture capital funds, are now being put in place.
The REACH programme of Jordan is an ICT orientated sectoral development programme noteworthy for its transparency, for its approach to evaluation and for its public-private sector partnership. In 2004 Tunisia launched the first explicit ‘innovation’ programme in the region. The PNRI or ‘Programme National de Recherche et d’Innovation’ is intended to build links between academia and industry. Tunisia also launched a pilot programme to promote the development of new businesses on the basis of corporate venturing by national public enterprise. Tunisie Télécom, Groupe Chimique de Tunisie, Compagnie des Phosphates de Gafça and the Société Tunisienne d’Electricité et du Gaz will take part in the pilot and a dedicated seed capital fund has been established to finance spin-offs.
It is hard to say for the moment if these developments indicate trends or isolated incidents in MEDA innovation policy. Nevertheless they seem to indicate a policy related learning dynamic as well as a capacity to innovate and adapt in terms of program design and implementation.
1
1.Overview of National Innovation Systems
1.1Snapshot of innovation performance
Levels of adoption of basic technologies provide useful indicators of the overall level of economic development within a country. Furthermore, they reflect the capacity of the economy as a whole to seize opportunities and adapt to new ideas. The following table compares the penetration of three basic communication technologies between three country groups – the fifteen long established EU member states, the ten new member states and the eight MEDA countries.
Table 4: Comparing Levels of Technology Penetration (Subscriptions per 1,000 Population)
Source: These figures refer to the year 2002 and are derived from the UNDP statistical database.
The current European leaders are Luxembourg for fixed line and mobile telephony with 797 and 1,060 subscribers per 1,000 of population and Sweden leads in Internet subscriptions with 573 per 1,000. The MEDA leaders are Lebanon in fixed line telephony and Internet subscriptions with 199 and 117 respectively whereas Jordan leads in mobile telephony with a rate of 229 subscribers per thousand of population. It is worth remembering that in 1990 there was little or no mobile telephony in Europe. The notable exceptions were Sweden, Finland and Denmark with 54, 52 and 29 mobile lines respectively per 1,000 at that time. Then the US had 21 and Japan only seven. By 2002 all MEDA countries have exceeded these figures, and with the exception of Syria and Algeria all have exceeded the 1990 rates for Sweden, Finland and Denmark. Jordan, Lebanon and Morocco have done so by a factor of four.
To get an overall impression of the structure of economies in these countries it is useful to consider the sectoral breakdown of GDP. The table below provides a breakdown in terms of agriculture, industry and services. Industry includes manufacturing, mining, construction and utilities such as water, gas and electricity. Services include government services, education and healthcare, wholesale, retail, real estate, travel, transport as well as hotels and restaurants. They play an especially important role in most economies. In countries such as Tunisia and Morocco tourism represents an important growth sector. In the case of Lebanon important service sectors include banking and commercial services. Although figures for agriculture are generally quite low, this sector plays a very important role in all MEDA economies as a creator of employment in rural populations.
Table 4: Value Added by Sector as a Percentage of GDP in 2002
Source: World Bank Data – World Development Indicators
A study by Mona Haddad[3] illustrates how the structure of exports from MEDA countries is changing with time. The following diagram based on her data compare figures for exports characterised in terms of their technology intensity. Reading from left to right adjacent bars represent the years 1985 and 1997 respectively. Countries are presented in decreasing order of total production for export of hi- and med-tech products.