SOCIETY & ENVIRONMENT
4.9 STRENGTHS AND WEAKNESSES OF THE NSI COMPONENTS
4.9.2 Weaknesses
This sub-section reviews the weaknesses attributed to the functioning of the South African NSI, some of which have been presented in Table 4.9-1. The weaknesses are presented in a critically constructive manner for SD through research in the NSI. The weaknesses within the South African NSI appear to be limited by several shortcomings involving policy perspectives, processes and organisational structure such as vertical specialisation and differentiation and horizontal integration and co-ordination issues.
One major weakness within the NSI literature is the differing interpretation and definitions. For instance, some scholars deny ‘the use of a system approach’ (Walters, 2001:9-11), opting for
‘process improvement’ and ‘system values’ (Bekkers et al., 2011b:211). The current STI-focused approach and interpretation of the South African NSI is not wholly consistent with the systems approach. The concept of 'NSI' has yet to gain currency of being wider than traditional R&D activities and being fully absorbed into the strategies of key actors. In general, according to the OECD (2007b:13), “there is no clear understanding of what the contribution of the overall innovation system actually is, and hence no basis for assessing whether or not it is adequate”.
Where there are far-sighted initiatives (often from DST), the initiatives may find only limited effect in implementation due to the uneven commitment and the inevitable silo-effect of organisational boundaries, or simply a skill shortage.
Owing to differences in socio-historical and economic structures, the NSI framework is not intended to provide a “one-size-fits-all” (Bell & Pavitt, 1993; Schneider, Barron & Fonn, 2007),
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especially in LDC context. However, despite the wide acceptance of the innovation systems approach, policy decisions are largely reliant on the S&T approach. As a consequence, government initiatives have mainly focused on outputs indicators such as R&D, technical manpower, patents and scientific publications. The conventional indicators do not offer convincing explanations of trends in innovation, growth and productivity (OECD, 2007b:15). The application of aggregate statistics can hide major inefficiencies in specific sets of institutions within the NSI. The OECD (2010b:84) cautions that “indicators must be used with care and single indicators do not always tell the story that the inexperienced policy analyst, or general user may assume”. Statistics and indicators can also be abused if not formulated from an arm’s length from the policy process. In Jensen et al. (2007:684) terminology, “…when one turns to policy analysis and prescription, as well as to the quantitative survey-based studies that support and justify policy, … contend there is a bias to consider innovation processes largely as aspects connected to formal scientific and technical knowledge and to formal processes of R&D”. Therefore, developing desegregates statistics to comprehend some observed yet unexplained X-inefficiency of the system as a whole is crucial (Ammons, 1996; Niosi, 2002:299). The Oslo Manual recommends the collection of data on barriers to innovation activity (OECD & Eurostat, 2005). Table 4.9.2-1 lists some of the factors that could act as barriers to innovation in South Africa.
Table 4.9.2-1: Factors hampering innovation activities COST FACTORS:
Excessive perceived risks
Cost too high
Lack of funds within the enterprise
Lack of finance from sources outside the enterprise:
o Venture capital
o Public sources of funding KNOWLEDGE FACTORS:
Innovation potential (R&D) insufficient
Lack of qualified personnel : o Within the enterprise o In the labour market
Difficulty in finding partners for : o Product or process development o Management partnerships
Lack of information on technology
Lack of information on markets
Deficiencies in the availability of external services
Difficulty in finding co-operation partners
Organisational rigidities within the enterprise:
o Attitude of personnel towards change o Attitude of managers towards change
Marketing partnerships
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Managerial structure of enterprise
Inability to devote staff to innovate MARKET FACTORS:
Uncertain demand for innovative goods or services
Potential market dominated by established
INSTITUTIONAL FACTORS:
Lack of infrastructure
Legislation, regulations, standards, taxation
Weakness of property rights
OTHER REASONS FOR NOT INNOVATING:
No need to innovate
No need because of lack of demand
Source: Adopted from Oslo Manual OECD and Eurostat (2005:12)
During data analysis, the factors in Table 4.9.2-1 were explored from the National Survey of Research and Experimental Development in South Africa: Main Results 2009/2010. Nevertheless, the national survey can ‘hide’ low patenting and international impact of business innovation.
Other weakness relate to the functioning of the NSI. In South African, although strides have been made in overcoming the fragmented NSI system, coordination issues present challenges in achieving national development priorities. Figure 4.9.2-1 presents the most problematic factors for doing business within the South African NSI, which indicate that the South African NSI is not yet open and permeable enough.
Figure 4.9.2-1: The most problematic factors for doing business within the South African NSI Source: WEF (2013:346)
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As supported by Figure 4.9.2-1, in the absence of coordination, the South African NSI may be under threat from various forces which include political, social, economic that push for ‘own’
policy agenda in the system. For instance, in the domain of social innovation, the lack of clean water can be viewed as a technology failure and therefore a 'problem of the NSI’. However, 'hard' technologies are well comprehended within the NSI, resulting in a failure in the 'political system'.
The SA DST Ministerial Review Committee (2012:87) views such political weakness as an
“indication of absence of clearly exercised political will…” Knutsen (2004:16-17) in reference to the sub-optimal NSI performance, states:
“It is reasonable to question the current level of fragmentation. The NRF has attempted several times to encourage not only inter-institutional collaboration, but also collaboration with the same institution and sometimes within the same department. The reaction has been slow and sometimes the resistance is obvious. Activities that are sub-critical in size do not guarantee sustainability of the research operation … (but) … there is light at the end of the tunnel in that concerted efforts are being made by DTI, through the National Advanced Manufacturing and Logistics Technology Strategy, to embrace the existing knowledge base in South Africa to develop knowledge networks to foster innovation”.
South Africa has experienced considerable NSI vertical and horizontal coordination difficulties that are a consequence of the current governance and institutional architecture of the NSI (OECD, 2006:80-82). The coherence and integration difficulties have led to insufficient linkage between the various levels of government, with consequently weak integration between national, provincial and local levels (OECD, 2006:79-81; 2007:231). Integration of research and innovation activities across the sectoral responsibilities are also strongly resisted within the South Africa NSI. Often, the risk of loss of control over activities or budgets is a key aspect, leading to inter-ministerial turf wars (Arnold & Boekholt, 2002:25). Many sectoral S&T services under-perform owing to a lack of shared comprehension because the trust placed in voluntary inter-departmental cooperation has not been realised. The agencies that do exist (science councils, funding agencies, and HEIs, among others) may be insufficiently differentiated, with a consequent diffusion of roles and a weakened capacity to fulfil specialised roles needed for a sophisticated and responsive NSI.
As a whole, the South African NSI performance measurement and evaluation framework is inadequate and incomplete. The OECD (2006:81) notes that within the NSI framework conditions, evaluations of the actual outcomes of the policy instruments are generally unavailable, or at best descriptive. The inaccurate databases have resorted to distorted and inadequate resource flows in the NSI, both in quantity and nature (SA DST Ministerial Review Committee, 2012:83). Using
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out-of-date indicators and figures can be misleading for policymakers, who require statistics that accurately reflect the current NSI situation in undertaking reform efforts (WEF, 2013:65).
Notable M&E and planning weakness within the NSI has hindered the functioning of the NSI due to absence of an assigned responsibility for ensuring the availability, collation, maintenance, analysis dissemination of NSI performance in the form of STI indicators (quantitative and qualitative). Foray (2010:103) states that “what really matters in NSI performance is not the best shot but the weakest link” which, in this research context, is particularly true when the weakest link is engineering science. Weak links exists within the general field-specific ‘march of science’, for example a mismatch between the police and health department forensic laboratories, due to out-dated technologies (SA DST Ministerial Review Committee, 2012:83-85). At present, there is no entity that has the capability to do system mapping, analysis, building, steerage, evaluation, learning and foresight for the South African NSI.
Failure of NSMM for SETIs, with a lack of information-gathering and analysis for effective agenda-setting and prioritisation in the functioning of the NSI agencies is another NSI governance- related weakness. The intrinsic constraint on the scope-of-function of the DST has been explicitly or implicitly, due to the introduction of the 2004 NSMM for public research organisations. The fragmentation and a distinct lack of systemic coherence are but two of the symptoms of dysfunction associated with the NSMM (SA DST Ministerial Review Committee, 2012:9-17). No prospective NSI planning as envisaged in the SA DST White Paper of 1996 has been achieved, resulting in lack of systemic coherence and lack of a common purpose between the private sector, government, HEIs and civil society. The governance role of the DST in the NSMM was firstly to be the development of policy on standards for SETis. However, the SETI review system is unpopular, because of reviving and recycling unresolved problems and is run down because of lack of support.
The SA DST TYIP’s (2008:11-24) five 'Grand Challenges’ spear-headed by the DST, are designed to steer the resource-based economy towards a knowledge-based economy. However, resolving the Grand Challenges has been problematic because the challenges have been assigned to and spread across the various operating domains of government departments, and priority areas such as energy generation, the bio-economy, S&T, climate change and human and social dynamics. A growing obsolescence of parts of the knowledge infrastructure is a major concern for realising the TYIP (SA DST Ministerial Review Committee, 2012:16), which can be attributed to a reluctance to close down failing programmes of innovation, a term referred to as ‘exnovation’ by Hartley
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(2005). A major weakness in addressing the Grand Challenges has been the difficulties in finalising arrangements for public-private partnerships and the inability to replicate and mainstream innovations which has resulted in deep-seated gap between business and government.
Similarly, the available but limited level of resources and investment is spread too thinly over a wide variety of disparate purposes and projects. The documentary basis for quantitative assessment of the NSI resourcing (funds) issues is underdeveloped and insufficient, resulting in constraining any policy development or corrective action required for a NSI. A key NSI concern is the inadequate base for evidence-based decision-making and, in many cases, weak accountability for the expenditure of public funds (SA DST Ministerial Review Committee, 2012:17). Specific knowledge gap pertains to the effectiveness of the financial incentives, both direct (in the form of transfers and grants) and indirect, that pass through the DST. Weakness within the South African NSI has resulted in the inability to attract funding for long-term implementation A comparison of the 2009–2010 R&D expenditure data with those for 2008–2009 shows a decrease in GERD as a percentage of GDP from 0.92 to 0.87 total ‘real’ spend of only 1.3%, while the total number of researchers and R&D personnel has generally been static. This research observes that social innovation issues for addressing the wicked challenges are absent within the social pillar in South Africa. For instance, HIV/AIDS has had a negative impact on the social fabric and on the South African economy (OECD, 2007b:103). Alongside the South African human and social costs, the high incidence of HIV/AIDS erodes South Africa’s efforts to build a stronger and demographically restructured human resource (OECD, 2007b:13; CHE, 2004: 235-236).
Depending on the definition used, unemployment and poverty remain stubbornly high and affect the lives of up to about 40% of the population (OECD, 2007b:14). Impeding the functioning of the NSI is the deficit of HEIs-based research and research training and the serious deficit in high-order skills, particularly in the area of design, engineering, entrepreneurship and management (DEEM), which has been exacerbated by a global labour market that draws top talents towards the LDC (OECD, 2006:79-80).
The NSI theory and concept remains broad, largely focused almost exclusively on formal institutions and is viewed as lacking a strong theoretical foundation (Lundvall et al., 2002:221). As a result policy formulation is typically oriented towards fulfilling, expanding or reforming formal institutions (OECD, 2010a:133-140). The coexistence of “traditional” or “indigenous” knowledge and “scientific” or “modern” knowledge is a typical feature of LDC (Bell, 2006:6; Wamae, 2009:218). The important synergy between the persistence of economic dualisms, both formal and informal sectors, should not be underscored (Mbeki, 2003:24-27) as well as mechanisms to
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enhance indigenous knowledge (Sagasti, 2004:8; Forje, 2006:375). However, traditional knowledge systems are not well formulated, making them difficult to be proactive and adapt to new knowledge demands. The situation is exacerbated by the weak links between “traditional” and
“modern” knowledge systems (Bell, 2007:62-72). Innovation should take place across and over the whole spectrum of economic sectors and activities (not only in high technology) and types (not just formal R&D) (Foray, 2010:96). The weak link in addressing the dualistic nature of knowledge systems in LDC presents another challenge in establishing mechanisms for strengthening the interactions that promote knowledge flows within and between the two knowledge systems. To this end, the next section presents the chapter summary.