Close your eyes for a moment. Imagine you’re a twenty-five-year-old Product Manager at a Fintech firm in the heart of Islamabad planning to develop a digital payments solution based on blockchain technology. It’s another day at work in your office, which is in a co-working area next to one of the world’s largest digital payments solutions firms’ Innovation Lab.
The office space is subsidised even if your firm has not yet raised the next round of funding since the President of the Lab sees potential in your product and the entrepreneurial grit that your team brings to the area. You’re hungry after a long day at work, so you cycle to a neighbouring restaurant.
You cordially introduce yourself and exchange ideas about what you’re working on because the seat next to them is vacant. Given that you have no legal knowledge in your startup, you spent the following hour brainstorming regulatory obstacles you were unaware of.
This is only a sliver of what it means to be a Knowledge Ecosystem member. You work as a “knowledge worker” at Islamabad Technopolis, the flagship Special Technology Zone. Your work has the ability to change the country’s trajectory (and perhaps the region). Before delving deeper into the vision, it’s critical to take a step back and learn from history.
While there have been a few wasted opportunities, the way forward is now obvious to fully realise the potential of a young country bursting with possibilities. Pakistan’s economy fared better in the 1960s than that of South Korea, Malaysia, Indonesia, and even China. In 1960, our exports totaled USD 160 million, compared to only USD 32 million for South Korea.
We’re now stuck with USD 20-25 billion compared to South Korea’s USD 500 billion. What went wrong, exactly? Which opportunities did Pakistan lose out on that other emerging markets in the region were able to seize? One of the most critical was the shift to a knowledge economy based on technology, innovation, and entrepreneurship.
Knowledge is key to success in changing world
As technology advancements swept the globe, the demand for qualified knowledge workers surged in countries all over the world. In a fast-changing world, knowledge, which comprised the development of new ideas and the accumulation of intellectual capital, became the most important factor for success. The technology sector quickly established itself as the backbone of the knowledge economy.
However, one of the reasons Pakistani leaders, government officials, and entrepreneurs were unable to make this transformation a few decades ago is that they lacked the drive and understanding to appreciate the knowledge economy’s imperatives.
Pakistan’s time is now. We might be late, but that gives us a window of opportunity to follow a tried & tested model, adapt it to the context of Pakistan, and, finally, leapfrog to a new era of innovation. What is this tried & successful model? Moreover, how have we contextualized it to Pakistan through the new Special Technology Zones Authority (STZA)?
Science Parks are the Innovation clusters
Since knowledge, innovation, and technology entrepreneurship are the essential forces in a knowledge economy, the foundation is set through an ecosystem where the interplay between the respective forces can take place for the country’s economic development. One of the ways that countries, from the United States to China, have formed knowledge ecosystems is through identifying a geographical parcel with special laws.
Here, the various participants can take advantage of tax incentives, form strong partnerships, and engage in knowledge-intensive activities in order to achieve the common goals of technological entrepreneurship and innovation, which will, in turn, contribute to the region’s socioeconomic development. STZs, or Science Parks, are innovation clusters that include IT businesses, startups, R&D facilities, universities, incubators, and other facilities in a specific land piece.
They provide incentives that attract the best ideas and talents and further nurture them through an ecosystem approach where knowledge workers like scientists, lawyers, architects, researchers, academics, tech entrepreneurs, and technologists come together to build their intellectual capital further.
How Shenzhen SEZ changed China?
One of the essential high-tech clusters quoted globally for its success is Shenzhen in China. The Shenzhen Special Economic Zone (SEZ) was the first such zone created during the early period of modern China’s economic reforms. On August 6, 1980, the Standing Committee of the National People’s Congress authorized an area of 327.5 square kilometers to be designated as an experimental economic zone.
The Shenzhen SEZ was formally established after the province of Guangdong passed the Economic Zone Ordinance. It has served as China’s “window to the world” and “experimentation field” since the country’s opening up. A number of substantial reforms were implemented, including the sale of state-owned land use rights, a stock exchange pilot, personnel system reform, and the simplification of administrative approval procedures.
Shenzhen was ranked first in complete municipal competitiveness among all mainland Chinese cities in 2007. The Shenzhen SEZ has spent the previous two decades focusing on high-tech exports and ICT, as well as developing world-class enterprises such as Huawei, Tencent, ZTE, and BYD. Shenzhen is now known as the world’s IT capital, with a GDP of almost $400 billion.
Moreover, China’s Zhongguancun (Z-Park) has emerged as a supercluster of Asia’s leading entrepreneurs. Alongside this, South Korea’s Daedeok Innopolis and Singapore’s Sichuan Hi-Tech Innovation Park have played a crucial part in the rise of their respective countries’ economic and technological prosperity in competition with the rest of the world.
From producing successful startups to hosting manufacturing and R&D plants for some of the world’s largest tech companies, such clusters have been the driving force of innovation in the past few decades. Innovation Clusters, particularly in China’s Zhongguancun, also host major S&T universities and R&D facilities that offer a direct linkage to commercialize the knowledge-based output.
In 2007, Shenzhen was ranked first among all mainland Chinese cities in terms of overall municipal competitiveness. The Shenzhen Special Economic Zone has spent the last two decades focused on high-tech exports and ICT, as well as developing world-class companies like Huawei, Tencent, ZTE, and BYD. With a GDP of about $400 billion, Shenzhen is currently known as the world’s IT capital.
In terms of total municipal competitiveness, Shenzhen was ranked first among all mainland Chinese cities in 2007. The Shenzhen Special Economic Zone has spent the previous two decades focusing on high-tech exports and information and communication technology (ICT), as well as developing world-class enterprises such as Huawei, Tencent, ZTE, and BYD. Shenzhen is presently known as the world’s IT capital, with a GDP of almost $400 billion.
Others have succeeded, and now we have the chance to follow in their footsteps by embracing the pro-innovation concept and bringing Pakistan up to speed with its regional competitors, as well as creating an environment that encourages tech-based innovation and creativity. Because Pakistan has a strong foundation of tech workers who can develop exponentially, high tech clusters could be a fast-track socioeconomic plan for the country.
China’s success: outcome of sophisticated policy design
China’s amazing economic growth, wealth, and export sector development are directly attributable to the STZs’ intelligent policy design and spatial economic arrangement. Pakistan can repeat this achievement provided the proper laws and ecosystem for TDKE are put in place effectively and without the customary bureaucratic red tape.
The Shenzhen SEZ, for example, was established at a vital juncture in China’s reform and opening up to the outside world. Through comprehensive monitoring, assessment, and accountability mechanisms, the central government had a major role in authorising such SEZs and engaged in the accompanying decentralisation at a later SEZ development stage.
The Guangdong provincial government was also prominent in promoting the demand for an SEZ, taking the initiative in its planning, and facilitating its establishment. Furthermore, finally, the Shenzhen municipal government played a crucial role in implementing the reform and showed great courage in breaking down the traditional institutions.
As a result, STZ is a tried and successful mega initiative used by a number of countries, including China, Hong Kong, Vietnam, the Philippines, Turkey, and Qatar, to transform their economies from low-end technology levels, which focus on producing low-quality and cheap goods, to becoming world-class manufacturers and producers of high-quality goods and services. The various highlighted economies have been able to grab global markets, earn large foreign cash, and build valuable foreign exchange reserves as a result of this transition, allowing them to function as effective sovereign states.
One of the most essential and perhaps obvious policy tools, in this respect, was to prioritize legislation for setting up of STZs, which function as innovation clusters, to transform Pakistan’s economy and export base from low technology to a higher and value-added economy so that we can leapfrog and produce goods and services required by the global markets and thereby add the much-needed jobs and alleviate poverty.
Pakistan’s STZA: Building Knowledge Ecosystems
In recognition of the crucial need to harness the opportunities of the fourth industrial revolution, the National Assembly has issued a mandate to establish the Special Technology Zones Authority (STZA), which will provide legislative and institutional support for the development of the national technology sector. Under the Cabinet Division of the Government of Pakistan, this body will work to develop a technology-driven knowledge ecosystem and encourage modern innovative solutions and futuristic entrepreneurship.
Inspired by the success of China’s governance model for the development of SEZs, the STZA will develop Special Technology Zones (STZs) across Pakistan, provide particular incentives to attract investors, builders, and technology companies to partner with the government, and also provide one-window facilitation to local and international companies. The STZs will comprise Information Technology (IT) Parks, Software Technology Parks, Business Process Outsourcing (BPO) Complexes, R&D facilities, and Excellence Centres for tech-driven businesses and startups engaged in providing IT & IT-enabled Services (ITeS).
The Authority will hold itself accountable to the public based on its mandate-derived Key Performance Indicators (KPIs): 1) Technology Exports, 2) Technology Transfer, 3) Human Capital Development, 4) Job Creation, 5) Import Substitution, 6) Foreign Direct Investment, and 7) Research & Development are all important factors to consider. It is the first Authority to have the Prime Minister serve as President of the Board of Governors (BoG), demonstrating the government’s commitment to making the technology sector a strategic priority and assisting STZA in meeting its strategic objectives as quickly as possible.
STZA aspires to create knowledge ecosystems that would unlock Pakistan’s technological potential and propel the country toward becoming a Newly Industrialized Country (NIC), with Pakistanis enjoying higher living standards and better socioeconomic situations. Islamabad Technopolis, the flagship STZ, would be the country’s first knowledge ecosystem, demonstrating what it means to provide a collaborative environment for industry, research, and government under the triple helix model of innovation.