Investing in research and development and think tanks is one of the most important catalysts for sustainable economic growth and rationalizing strategic decisions to achieve the desired political and economic stability. Spending on research and development at all technical and social levels will raise the level of technology prevailing in the economy, improve productivity, and contribute to avoiding problems that the country may face due to the poor performance of economic sectors or irrational decisions due to individual decisions taken at the sectoral or aggregate level. It also supports the decision-maker in the country with the necessary studies and research that contribute to the clarity of vision in the long and medium term, in light of local and international variables.
Research and development constitute the most important foundations for sustainable economic growth, global excellence, and global leadership ability. Specialized studies have proven a relationship between economic growth and what is spent on research and development as a percentage of the total national income, which is considered the global average for economically advanced countries to be 2.5 percent. For example, South Korea spends the equivalent of 3 – 3.5 percent of the total national income on research and development, which in turn had the greatest impact, in addition to political variables, in transforming the Korean economy from an imitative and developing economy to an industrial and innovative country. In the 1960s, Korea was considered an economically backward country, and Korean products were poor and imitated. Now, Korea is one of the industrialized countries that competes technically at the global level; its main supporter is scientific research.
Research and development is not limited to technical issues only, but also includes political, economic and social issues to be reflected in fateful decisions that contribute to the clarity of vision for the political and economic decision-maker in the country and the determination of the country’s long-term strategies and the treatment of the social, political and economic problems it suffers from.
Various economic growth theories have focused on this relationship between economic growth and spending on research and development in the economy. Therefore, some studies in economic growth theories have linked the reason for the economic backwardness of developing countries compared to industrialized countries to the level of technical development, which is considered backward in developing countries compared to industrialized countries due to the low or non-existent spending on research and development in developing countries. One of the important questions that economic growth theories try to answer is whether poor countries are poor due to a lack of production factors or due to the backwardness of technology in those countries? Some studies have attributed the reason for the disparity in per capita income between countries to the technology gap associated with good management and spending on research and development.
Technical development affects economic growth in several ways, as achieving sustainable growth in the long term depends on growth in technology, and the marginal productivity of capital and labor is affected by technical growth. One of the positive effects of technical development is that the shortage in the number of workers or capital may be compensated by technical development. In addition to the above, the inter-relations between the various sectors of the economy are affected by the available technology, although they will not benefit to the same degree from technical development.
The total gross domestic product may grow continuously if there is technological development even if there is no growth in the increase in capital or labor. Therefore, the economic growth in the total domestic product depends on labor and capital alone, which will not achieve continuous growth for the economy due to the decline in marginal productivity. Therefore, investment in technology, part of which is investment in research and development, is necessary in order to maintain or increase the rate of return achieved on capital and labor. Failure to invest in technology, which results in the absence of growth in technology, will lead to a decline in economic growth due to the decline in productivity in capital and labor, which can only be maintained through technological development. In addition, technological development increases the demand for skilled workers with high wages and reduces the demand for unskilled workers. For example, the wages of college graduates in the United States increased compared to high school graduates by more than 25 percent between 1979 and 1995 due to the technological development witnessed by the American economy, which requires skilled labor to accomplish it.
By studying the reality of spending on research and development in the Kingdom, which does not exceed 0.2 percent of the gross national income, we find that it is low compared to the global average, in addition to the fact that what is spent on research and development does not benefit the local economy by spending it on researchers outside the Kingdom or specialized centers abroad. The Kingdom also does not have independent creative think tanks, whether governmental or private, and what government agencies produce in terms of reports is sufficient to make long-term strategic decisions. We see this in the decisions issued by official bodies, which often do not accurately capture what the citizen aspires to and do not address the basic needs of society, and many decisions are made under temporary circumstances. Due to the absence of solid research from independent research centers and creative think tanks, government decisions are issued that we find after a period of time to be wrong and have a negative impact on society, and they are cancelled and replaced by other decisions that are cooked up in the same way, making them very susceptible to error.
One of the most important reasons for the sharp decline in spending on research and development in the Kingdom is the lack of awareness at the level of the government or private sector of the importance of research and development at the overall and sectoral levels and on companies’ profits in the long term. Since the return on research and development is mostly a social return, especially in social issues, the government’s direct support for research and development and the establishment of specialized centers will help address many societal issues and contribute to providing the necessary studies that support making fateful decisions that require in-depth studies and specialized centers that study all their dimensions for the citizen. Linking research and development to local public and private universities will also contribute to encouraging investment in developing research capabilities among faculty members, which will be reflected in raising the level of university education. It will also provide the Kingdom with specialized capabilities in various fields, the effects of which will be reflected in all sectors of the public and private economy, which will improve productivity and raise performance efficiency.