National Innovation System of Mongolia

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1 National Innovation System of Mongolia Academician Enkhtuvshin B. Mongolians are people with rich tradition of knowledge. When the Great Mongolian Empire was established in the heart of Asia, Chinggis Khan stepped up the art of military by initiating a new form of militaristic culture, brought together the best of the best minds from different lands and founded an Empire that would cover half of the world, recognizing Mongolians to the world. The Council of Chinggis Khan (Council of Scholars) was established to assemble the minds of scholars on State affairs to form a enlightened state tradition. He also wrote a law titled Ikh Zasag or Great State and formed the Ikh Huraldai or a modern Parliament to discuss important issues. Chinggis Khan also structured his soldiers and people assigning in groups of 10, 100, 1000, for better coordination and organization. This was a unique managerial structure. Chinggis Khan s sons, especially Khubilai, his grandson established the Mongolian Empire and derived the very first academy in order to develop sciences such as, astrology, mathematics, musicology and literature. Since that time, Mongolians endured various ups and downs. Yet, Mongolians kept the tradition of recognizing knowledge and intellectual power and continued to foresee intellectual life as a rich part of life. Institute of Science was established in 1921, since Mongolia found its independence. Later on, State University of Mongolia and Academy of Sciences were established in 1942 and These institutions became the hub of research science. Research science continued to develop so that various institutions in charge or different sectors were established. Some of these institutions include, institutes for the study of history, natural and social sciences. Moreover, these institutions prepared a national intellectual human resource. In the 21 st century, Mongolia has founded the system basics to develop industrial scientific knowledge, transform acquired knowledge into new technology, products and services. The Government of Mongolia is putting great emphasis in the scientific policy making by highlighting and storing National innovation system. The Parliament of Mongolia adopted the Law on Science and Technology in In this law, innovation is described as transformation of the results and products of researchers and introducing the end product to industries and services. The state policy to store and develop national innovation system is to form a triple helix between scientific, business and Government organizations. In other words, research, business and policy are being brought together to form a harmony.

2 The establishment of a triple helix, from one stand point, makes possible for the State to become a subject of cooperation. From another point of view, it makes possible for scientific organization and universities mandatory to coordinate with the business sector and transform knowledge and technology into a form of business. Additionally, it will be necessary for the business sector to compete within, based on science and technology. All in all, science and technology is not just a knowledge producer and riches of the society. It is also one of the basic foundations of development of a State. The Government of Mongolia, with an active support of UNESCO has adopted the Master Plan of Science and Technology The plan is now used as the tool to develop Mongolia s science and technology sector. Within the Master Plan, the following statements are to be forced in order for Mongolia to follow through the path which the world is inclining towards in this field. Science and technology policy needs to be adaptable and flexible enough to respond to changes in the regional and global technology and business environment, therefore, comprehensive research is needed to initiate and adjust to an effective policy implementation mechanism Increasing funding sources to support the collaboration and partnership between governmentprivate- research organizations Policy support for science and technology activity should be directed towards stimulating innovation activities that are essential in other sectors Developing and implementing a policy that stimulates the commitment towards establishing a network with integrated and coordinated goals and directions; the efforts of such policy support should be aimed at enhancing technology development and its feasibility Science and technology policy needs to aim at establishing a system with constant monitoring and evaluation to improve Government investment efficiency in science and technology sector Developing alternate implementation programs with valid and feasible science and technology policy priorities and objectives To support interrelated science and technology activities To support the knowledge based innovation activities of the national development strategies To establish the science system as the basis of research and technology development and improve international collaboration To improve the technology growth and innovation capacity of private enterprises. To focus on the improvement of technological capacity of priority industry sectors

3 Linking national science and technology capacity with the regional and global network The following principles were pursued in the development of the Master plan: -Encouraging private sectors to participate in the development of science and technology sector and utilizing the results -Ensuring information transparency -Developing a plan that reflects socio-economic interests and objectives -Supporting the transfer and adoption of advanced foreign and domestic technologies -Ensuring the transparency and accuracy of performance indicators of investments The following vision, mission and values are focused by the Master plan. These include: Vision of science and technology In the 21 st century Mongolian science and technology follows the primary principle to be a nation developing science based on new knowledge and advanced technology, to practice the national innovation system as a driving force for social and economic development for 2020, and to ensure secure and quality living of the people by creating and producing advanced knowledge and by continuously supporting the science and technology progress and development. Mission of science and technology The mission of the science and technology of Mongolia is to practice the effective management and finance systems based on the social and market demands, ensure ecological balance by supporting effective utilization of sectoral resources by facilitating effective education- scienceindustry collaboration, by gaining comparative advantage through enhanced competitiveness of small and medium enterprises and by maintaining environmental and ecological balance. Valuables -Intellectual capital -Integration of research and education -Innovation partnership There are 5 key goals and 17 strategies in the Master plan. For example: -Improve the competitive nature of research works based on market economy demand -Establish a productive system of innovation

4 -Develop and improve the legal condition for research production -Reform the economy based on innovation technology -Improve and expand science and technology international cooperation Approaches to implementing a innovation system include: Strategy 1. To create economic stimuli for the collaboration of science-industry activities and joint research work. Implementation approaches: -Support and stimulate co-funding or research development by public and private sectors, strengthen the cooperation between public and private sectors in the field of science and technology -State support in the implementation of joint research by firms and research institutions in the framework of science and technology priorities -Coordinate closely the selection of government funded research themes with innovation activities -Organize innovation activity as a principal form of activity of research institute and universities -State support in creating at research institutes and universities the units for technology transfer, incubator center and high tech small and medium enterprises Establish a council on technology policy at regional and national levels. Strategy 2. Implement a policy supporting all types of innovation funding -Create a system of continuous funding for projects at all phases of innovation -Create a venture fund for financing -Establish legal environment for continuous support for all phases of innovation activities through financial policy -Expand state support on activities of start up innovation firms -Improve the legal environment on regulating financial risks of innovation -Develop cooperation of parties involved in the innovation system -Create legal framework of owning, protecting, transferring and using the results of governmentfinanced innovation projects

5 Strategy 3. Create and develop the innovation infrastructure Implementation approaches -Develop the production technological infrastructure (technology park, innovation and technology center, business incubator, technology transfer center) -Develop the forms of cooperation of parties involved in the innovation sytesm -Adopt the law on legal status of the elements of innovation infrastructure that was created with the participation of state property -Within the framework of economic priority areas, create and develop innovation infrastructure based on large regional industries -Provide state support aiming to create the centers responsible for conducting the technological research, patenting, finding investors, protecting the legal rights of intellectual property. Strategy 4. Establishing a system that prepares specialists and provides information and consulting service that are useful for participants in innovation activities Implementation approaches: -Create a specialized National information database responsible for supporting innovation activities in order to protect, popularize and commercialize the results of government financed innovation research -Create (independent, or under a research institute or university) centers of specialized education and consulting services on protection of intellectual property, standardization, delivering certificates, conducting technological evaluations -Establish in the name of innovation a continued multi-level training system, introduce and diffuse the innovation culture in science and production fields -Prepare specialized human resources in innovation activities, conduct specialized training -Provide colleges and universities that have license to conduct training on innovation policy and management- with skilled instructors and professors, enhance the learning environment -Advertise by mass media the results and achievement of successfully implemented innovation activities, regularly, organizes the innovation exhibition and trade fairs Expected outcomes: -Establishment of an effective national infrastructure, legal environment and management for innovation activities

6 -Development of market relations in use of intellectual resources, innovation assets, innovation products and services supporting innovation -Creation of multiple forms of funding and government supports for innovation activities -Creation of advanced technology based innovation clusters as the result of enhanced scienceindustry collaboration. Based on the studies that we have conducted in the recent years, we see that Mongolia must focus on improving the competitiveness of industries, transition to a knowledge based economy as the key aspects of development in the next 15 years. Under the President s initiation, a National Policy Framework for , an article on stabilizing a knowledge based economy is underlined. This National Policy framework was adopted by the Parliament of Mongolia in Currently, knowledge based economy total (collected) index for Mongolia is 4.23, which is 35.6 percent higher than it was 12 years ago. In comparison to a study carried out by world bank, the average index in South East Asia is 3.63, Uzbekistan 3.27, Vietnam 3.10, Kazakhstan 4.5 and PR of China An analysis based on the main aggregate result, in order to enforce knowledge based economy it is important to pay closer attention to innovation issues. For example, 1. Economic incentive and institutional regime rating is Educated, creative and skilled people rating is Dynamic information infrastructure rating is 4.67 Mongolia s innovation index, in that case rate is Therefore, a National Innovation development program ( ) was adopted by the Government of Mongolia in 2008, within the framework of the Master Plan of Science. This National Program consists of 4 sub chapters. 1. Chapter on establishing an innovation structure 2. Chapter on developing advanced technology 3. Chapter on supporting academic and research work at state owned higher education institutions 4. Chapter on preparing young researchers

7 My statement will focus on the chapter on establishing an innovation structure. This chapter is closely correlated to the Master Plan of Science policy strategies and states the means of implementing the objectives, clarifying the financial, legal terms and results in a detailed manner. GRAPH The following model is proposed to develop research into innovation level In order to establish innovation, the participation of research institutions and Universities are essential. State involvement to execute, coordinate and provide assistance is also grand. However, business organization participation and initiation, as well as legal coordination and bonuses from state are needed when innovation surpasses the valley of destruction. Therefore, the Mongolian National Innovation system needs to be implemented and developed with a tight cooperation of public and private sector approach. Scienceeducation- business chain of mechanism is required. Basic Model for National Innovation system of Mongolia Subsystems of the Basic model for National Innovation systems are:

8 Building knowledge, transferring knowledge and Supporting industrial and commercial innovation. These include: -Build knowledge in scientific and educational institutions in building knowledge sub system -Build technology transfer center and incubators in scientific and educational institutions in industrial subsystem -Small industry institutions and small and middle sized innovation industries in commercial subsystem -Information, legal and administrative coordination and financial assistance will fall under innovation support subsystem. In order for Mongolia to develop the National Innovation system, it is important that the issue be tied closely to the current administrative coordination of Science and Technology. This point is stated in developing the structure of National Innovation System Structure model. The following units are built in the model: State wide national policy, planning and implementation of technological affairs are insufficient and there are very little sector wide harmonization. In order to tackle this issue, an independent council of national technology experts should be formed under the cooperation of different related Ministries. This council will be in charge of coordinating industry technology capacity, status, evaluation and implementation and providing proposals to related Ministries and agencies. In addition to the aforementioned duties, the council will determine the terms that have effect on technological security and evaluating them.

9 Structure of National Innovation System of Mongolia In order to fulfill the goals to establishing a development fund for innovation, provide specific amount of state savings to innovation are steps to increase economic competitiveness and provide sustainable development. The Fund will support the correlation of Science and technology discoveries and innovation to national industry development and innovation infrastructure development. Practices of countries (Finland, Sweden, Japan) that are successfully implementing innovation show that a separate Innovation Agency operates under the Ministry of Industry of each country. Within the framework of developing innovation, an Agency for Technology development and Business developments are proposed to be established. By establishing these agencies, benefits from foreign investment and trade innovation will increase. The following strategies are proposed to develop National Innovation system. These are: Activities to be implemented within the framework of the Chapter on building knowledge: -Reform the coordination and financial mechanism of academic and research organizations -Make results of research profitable that it meets demand of the market economy -Narrow down the priority issues of science and technology by prioritizing what is essential for own needs

10 -Support and provide bonuses to scholars and researchers by enabling them to make profit from research work -Improve the quality of education, reform the structure and support professional and engineering professions. -Improve the selection process of draft research proposals Activities to be implemented within the framework of the Chapter on developing the system of knowledge building -Provide opportunities for research and development organizations to take loans (low interest loans) -Provide specific funds from state to selected research work proposals -Improve the harmonization of research organizations and private businesses and enterprises - Monitor to increase foreign investment -Focus on introducing advanced technology and industry ethics, provide tax free work opportunities to foreign experts -Attract foreign research and development activities within borders (by freeing tax) -Establish a foreign investment statistic, correlate the methodology of calculating foreign investment with the methodology used by the International Monetary Fund -Expedite transfer of technology Activities to develop innovation production: -Follow through a policy that prioritizes the industries that are most in need to develop national economy and support future development. Priority sectors that include product and new technology development will need to take into consideration other sectors, companies and industry sectors that will best support national development. -Give responsibility to the Government to harmonize the link between the orderer, financer and sometimes buyer when supporting priority industries. This is especially the case for basic and need based research works with high risks, improving the opportunities for business innovation, acquiring information and knowledge about new research and improving the cooperation between related subjects. -Determine priority sectors of innovation development from the Government, develop and implement innovation development programs, provide a coordinated and economically attractive environment to fulfill the investment promises to implement Government policy on innovation,

11 finance specific goal determined activities from national budget, and in some cases, involve Government to the industrial process of competitive products. When supporting research and production process of industry sector: Provide grant or scholarships (50 percent) to specific research works Provide loans and a tax free environment Support acquirement of technology that is appropriate to produce competitive products for international export Improve the technological and scientific capacity of small and medium scale industries Develop infrastructure of industry research and production ->Implement policies that support innovation: -Fund dividends of innovation proposals and activities, provide low interest loans -Provide land and equipments under grant or favorable conditions to innovation business start ups -Combine the expenditure used from private sectors to the price of the end product -Provide a tax free environment for expenses incurred for research equipments, including purchase of building for research work -Introduce a system of tax loan -Provide low interest loans for purchasing research equipments -prepare funding (risk factor calculated); prepare staff -Provide favorable conditions at customs to equipments for advanced technology and industries -Develop and introduce venture capital ->Develop innovation infrastructure elements, -Establish scientific, educational and business complexes centered at Universities

12 -Establish incubators, industry park and clusters -Establish innovation centers ->Provide participants of innovation activities with all necessary information, give consultations and develop a system to prepare experts, ->Enhance the legal conditions for innovation, (TABLE) In conclusion, by 2015 Mongolia will aim to fulfill the following: -Assemble an opportunity that will reform economy based on developing advanced technology -Make possible for a technology hub/network to form based on national priority technology -Build greater number of small and medium sized industries to support the collaboration of science and industry -Develop economy through use of intellectual capital and technology to circulation -Develop and introduce high tech, and increase the circulation of innovation to stabilize a economic mechanism that awards innovation -Increase private sector participation in science technology and innovation programs and implementations. I thank you for your attention.

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