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| Photo published by CNN in 2018 in an article entitled Africa's Innovations that could change the world. |
Damali Ssali.
There is an interconnection between trade and innovation with
one reinforcing the other.
This symbiotic relationship is illustrated by the fact that
innovation creates new goods and services that become a source of comparative
advantage, which in turn increases trade.
Trade contributes to knowledge transfers between countries
because knowledge and technology is embodied in the goods and services that are
traded.
Global networks and cross border value chains have ensured
that innovation, trade and industrial policies are intertwined much more
closely. As a result, many countries are actively pursuing very ambitious
innovation policies to boost their competitiveness.
This is informed by the fact that over two thirds of world
trade is conducted through global value chains. This has led to a reduction in
trade barriers, lowered the cost of transportation and created jobs in emerging
economies.
As an example, the value of global trade in clean
technologies has more than tripled over the last decade increasing by about 60%
from 2006 to 2016. This has contributed to economic development, job creation
and climate resilience.
Therefore, holistic approaches to tackling the barriers to
the development of clean technologies could help emerging economies further
harness the trade opportunities that are availed by clean technology.
As such, the current trade regulatory frameworks, such as the
World Trade Organisation Trade Facilitation Agreement and the African Continental
Free Trade Area (AfCFTA), should be re-assessed to ensure that they adequately
articulate innovation as a specific policy objective in relation to the
knowledge economy and the digital environment.
These trade agreements must ensure that; the rules on digital
trade are codified, new rules are developed to facilitate the movement of
people to pursue innovation opportunities and rules are developed to codify
data collection methodologies on innovation.
The codification of the digital trade policy to cover trade
across borders can be done incrementally, by building on the principals of
existing international and continental trade agreements. Alternatively, an
entirely new international arrangement such as a Digital Economy Trade
Agreement can be considered.
Similarly, the creation and spread of new ideas is crucial
for innovation. Therefore, the movement of people should be facilitated by
policy makers while concentration should be around barriers that hinder the
movement of innovative entrepreneurially skilled people.
The AfCFTA aims to create a single market which is expected
to not only generate a combined GDP of USD3.4trillion, but also benefit over
1billion people on the continent.
Africa’s digital revolution is riding on the promise of the AfCFTA.
More than 400 tech hubs have sprung up across the continent with Lagos, Nairobi
and Cape Town emerging as internationally recognised technology centres. These
three cities host thousands of start-ups, incubators, innovation hubs and
employ thousands of young people. Other cities including our own Kampala are
equally catching up.
In simple terms, what really matters to the global trade
economy driven by innovation are the benefits that result from that innovation.
This is the creation or ‘catalysation’ of truly regional, continental and
global markets.
In conclusion, both economic theory and available evidence
demonstrate that trade has a positive impact on innovation, which in the long
run increases economic growth.
Jason Furman, the Chairman of the Council of Economic
Advisers during the Barrack Obama era captured the role trade plays in
innovation when he wrote in 2015 that “Trade increases both innovative
productivity and incentives for innovation”.
Therefore, policy makers who seek to enhance emerging
economies can do so through supporting innovation to achieve higher growth.
This can be done by, not only investing in scientific research and the
innovative capacities of entrepreneurs, but also, by making a concerted effort
to liberalise trade as a mechanism to increase innovation.
This article is dedicated to Dr. Stella Kiliva who
inspired and motivated me to utilise this platform on a much regular basis.
Thank you and I am forever grateful.
Nile Post : Traders and their advocates must support Innovations because the two are interconnected.
Soft Power : Thriving Trade Increases Incentives For Innovation.
