Stepping up the innovation ladder

Protests in Taiwan against a trade pact with China illustrate the difficulties that countries can have in staying innovative enough to compete with low-wage nations. Innovation often requires a culture shift.

The Monitor's View

From Brazil to Ukraine, mass protests these days are often about democracy and corruption. Not so in Taiwan. In mid-March, demonstrators occupied the legislature to protest a bill that would expand trade with China. At one point, more than 100,000 people were on the streets of Taipei.

Taiwan’s protests are a window on a dilemma for many countries: As they seek to raise the quality of their manufacturing in order to compete in the global market, they must also develop a culture of free-spirited innovation and risk-taking to keep moving up the high-tech supply chain. In Taiwan, the proposed trade pact would likely hurt mid-sized companies that have yet to develop that sort of creativity and invention to compete with low-wage firms in China.

The protesters, many of whom are also worried about Taiwan becoming too close to China, had sought to delay passage of the trade bill for fuller review. On Monday, they achieved their wish and plan to suspend the sit-in.

The protests are a lesson in the difficulty of achieving economic progress without also changing a country’s culture, such as its level of freedom in the workplace and tolerance for failure in research – or what Americans call a garage culture. Even nations that have those traits cannot afford to lose them. “The nation that goes all-in on innovation today will own the global economy tomorrow,” President Obama reminded Americans in his latest State of the Union message.

In China, too, leaders have put innovation at the “core” of the country’s economic strategy. Last month, Premier Li Keqiang announced that the salaries of researchers must be linked to the market value of their research.

This competitive drive for innovation is breaking up old concepts of rich and poor. Last fall, Klaus Schwab, founder of the World Economic Forum, which issues an annual report competitiveness and innovation of 148 countries, stated this:

“I predict that the traditional distinction between countries being ‘developed’ or ‘less developed’ will gradually disappear and we will instead refer to them much more in terms of being ‘innovation rich’ versus ‘innovation poor’ countries.”

Taiwan’s ranking in that index has dropped in recent years, as has South Korea’s and Japan’s. Like many countries struggling to come up with the “next big thing” in technology, they are being forced to look inward at their innovation strategy, which includes how they manage workers and create a climate for fresh thinking and grand goals.

In the United States, many scholars worry that Americans are losing their inventive edge. In an essay in the April issue of Mosaic magazine, political scientist Charles Murray writes about two qualities – purpose and autonomy – that help stir innovation:

1. “A major stream of human accomplishment is fostered by a culture in which the most talented people believe that life has a purpose and that the function of life is to fulfill that purpose.”

2. “A major stream of human accomplishment is fostered by a culture that encourages the belief that individuals can act efficaciously as individuals, and encourages them to do so.”

Among Asia’s Confucian cultures, Taiwan was a leader in showing that a culturally hierarchical society could develop a free-wheeling egalitarian democracy. Now it faces the similar task of liberating its scientists and engineers. Many Taiwanese companies are already innovative – as anyone with an HTC smart phone knows. But to stay competitive against China, it must look deeper at what drives people to break mental bounds and discover new ideas. Then the Taiwanese will more readily accept more open trade.