Saudi researcher Dr. Raja Almarzoqi underscored the connection between innovation, international commerce movement, financing and economic growth that has become an enabler of global economy that crosses borders.
He called for the adoption of government policies and legislations that would benefit further from the relationship between research, development of innovation and economic growth to push them towards achieving sustainable development, especially amid the openness of the economy, movement of people and flow of investment.
Almarzoqi is a Chief Economic Advisor at the Saudi Ministry of Economy and Planning and a faculty member at the Institute of Diplomatic Studies. He is a previous Adjunct Professor at Thunderbird School of Global Management, Arizona State University, US and King Saud University, Saudi Arabia and former Advisor at the International Monetary Fund.
Along with John Mathis, he authored “Global Innovation, Finance, and International Commerce”, published by Routledge in December.
Mathis is an emeritus professor of global economics, banking and finance and the former director of the Global Financial Services Center at Thunderbird School of Global Management, Arizona State University, US.
Almarzoqi said the emergence of the economic importance of innovators rose with growing openness of the global economy and its interconnectedness through international trade, investments and individuals. This led to a growing attractiveness of innovation to global investment worldwide, crossing geographic borders of innovative countries, which helped them achieve high levels of growth.
Financing tools
Almarzoqi told Asharq Al-Awsat that the growth of bold investment funds played a clear and pivotal role alongside financial markets. He added that the invention of financial tools led to a drop in the risks and increase in the financing ability of businessmen and emerging companies, specifically technological countries where invention is key.
He noted that as finances became available and with the growth of the number of its tools, innovation also grew dramatically since 1750, the time of the first industrial revolution. The revolution helped increase global production that managed to keep up with the growth in demand caused by a rise in population growth and improvement in individual income across the globe.
This no doubt had a role in maintaining prices at an acceptable level, he added.
It also helped in supporting quality of life given that inventions introduced incredible change in means of transportation and communication and facilitated the flow of goods and movement of people at lower costs, Almarzoqi said.
Given the openness of the global economy and ease of the commerce movement, several inventions became accessible to all people, benefiting the producing and consumer countries alike, he noted.
Inventions, he stressed, are among the most important sources of sustainable economic growth, so financing and supporting them yields higher economic gains for the national economy that go beyond the costs the society has to incur as a result of this support.
Government role
Almarzoqi said his book also focuses on the fundamental role governments can play in innovation. He stressed the importance of economic policies and legislations that are adopted by governments to encourage research and development.
He added that the relationship between research, development and economic growth is positive as demonstrated in the theory of endogenous economic growth. Several studies have proven the positive relationship between economic growth and spending on research and development.
As a result of these theories, advanced countries have adopted an increase in spending on research and development at no less than 2 percent of GDP. Moreover, countries, such as South Korea, even went above the average and reached 3.5 percent. This helped transform the Korean economy to the situation it is now compared to the way it was in the 1960s and 70s.
Book chapters
Almarzoqi and Mathis’ book consists of 266 pages and is divided into nine chapters and three main sections. They tackle the industrial revolutions, and examine the environment and circumstances surrounding the inventors and explore their backgrounds to determine, why at a specific time, they identified a need that became the seed for invention and, what was their method of successfully commercializing their innovation.
They focus on the financing of the inventor, the innovation, and the commercialization of the invention. They analyze the changes in finance during the shift from a labor-based production process to a more capital-intensive production process, and what new financial products or financial markets were created to facilitate this transition.
They explore the impact of global commerce on the inventor country’s innovation environment and international competition impacting the innovation’s production, distribution, and sales, as well as, investigating any financial impact from the demand side and whether that impact was domestic or global in character.
Furthermore, they consider if and how global finance and international commerce including the migration of people, together play a role in helping the disruptive invention satisfy a need in society, whether from a production or consumption perspective. Finally, they search for common elements that repeatedly inspired inventors and their disruptive innovations over time.
