Presentation to the Bio-medical Research Council of Singapore
Dr. Thomas D. Lairson
Gelbman Professor of International Business
RollinsCollege
May 30, 2006
Singapore’seconomic strategy with a focus on Biopolis
I. Singapore has been extraordinarily successful in leveraging existing and newly created assets to generate economic growth and sustainable development
A. Not a democracy (in the Western sense) but very effective government
B. Singapore’s government has been very effective in creating and sustaining the political conditions for sustainable development – especially its efforts to distribute economic benefits across social classes and conserve environmental resources
C. Leveraging has focused on attracting transnational corporations:
(1) Agglomeration economies – transnational firms move in follow-the-leader patterns – create attraction to more TNCs
(2) Use of state-owned enterprises to expand local capabilities
(3) Effective institutions in capturing, diffusing and applying knowledge
(4) Institutional capacity for adaptation, creating new capabilities and moving up the value chain
(5) Leveraging knowledge for growth in services
II. Weaknesses in the Singapore strategy
A. Compared to Taiwan and Korea, Singapore has a dearth of local firms operating competitively in global markets
B. Limits to the capacity to leverage knowledge assets in TNCs
C. Size and capabilities of a “creative class” in Singapore
(1) Entrepreneurial environment – venture capital?
For evidence on Singapore VC and angel investing, see CMIT Wong…ppt
(2) Tolerance and creative class
(3) Import knowledge elites versus “home grown”
D. Levels of local R&D/Basic Research – growing but low compared to most advanced nations
III. Biopolis
A. Global knowledge leadership – new economic strategy
B. Knowledge cluster creation – knowledge diffusion, synergies, linkages, information exchange, increasing returns – One North Project
C. Business model(s): top of the value chain; drug discovery and licensing; health services; attract TNCs
D. contrast to Global Production Networks: must be at the top of value chain to win; participate as equal in global biotech knowledge networks; must have high capacity firms and firm networks to capture and capitalize on knowledge
IV. Knowledge Power in economic growth
A. Knowledge is unlike other economic inputs such as energy or products like autos – self-reinforcing process in economic growth
(1) Shared good – network effects; value increases as knowledge is shared
(2) Knowledge can be reused at low costs – in novel ways
(3) The more knowledge one has, the more you can obtain at decreasing marginal costs
(4) Innovation – recombination of knowledge yields entirely new ideas – basis for competitive advantage
(5) Knowledge power: we do things previously impossible or prohibitively expensive
B. What institutions (governance systems) operate best in a high knowledge-intensive economic system?
V. Evaluating Biopolis
A. Global knowledge leadership strategy requires a different governance system than fast-follower strategy: hierarchies versus distributed networks
B. Innovation systems: State-directed versus venture capital directed
Hierarchies are effective at mobilizing resources
Networks are effective at innovation
C. Power of distributed innovation systems: greater capacity for high complexity and richness of information flows; more knowledge sharing; greater capacity for exchanging tacit knowledge; higher ability to generate, capture and apply recombinant knowledge
D. Differentiated innovation systems: separate funding of basic research and funding of economic applications
E. Creating a complex, distributed, differentiated innovation system requires a wide range of public goods and coordinating processes: state role in supplying these public goods must retreat as self-organizing capabilities of networks emerge
E. State role shifts to the (D)ARPA model once the complex, distributed, differentiated innovation system is created