1 the needs for adaptive innovation policy under free market complexity: the indonesian experiences...
TRANSCRIPT
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THE NEEDS FOR ADAPTIVE INNOVATION POLICY
Under Free Market Complexity: The Indonesian Experiences
The Globelics Africa Conference, October 31th - November 4th
2005
Pretoria, South Africa
The State of complexity
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By Erman Aminullah The Indonesian Institute of Sciences (LIPI)
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POINTS OF PRESENTATION
INTRODUCTION POLICY MAKING UNDER
COMPLEXITY INNOVATION POLICY UNDER
FREE MARKET COMPLEXITY PAST EXPERIENCES AND
FUTURE POLICY NEEDS
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Introduction The reality of policy matters
1. Complexity2. Resistance
Dealing with complexity & resistance Policymaking process shift
from ‘rational’ to ‘learning’
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Introduction Current reality
1. Economic complexity 2. Some resistances toward free market
Economic complexity & policy resistance toward free market
Needs of ‘Learning’ to softening the pressure of free market
Innovation and Technology Learning
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POLICYMAKING UNDER COMPLEXITY
The emergence of unintended events and behaviors (butterfly effect)
Because…… Complex system
sensitivity against initial condition
(the rule of initial condition)Lorentz Curve
Complex sistem behavior
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Dealing with complexity Seeing the elements as
parts of the wholeness, containing:
-interconnection, -non-linearity, -uncertainty
Like…… Seeing the trees
viewing from the forest
POLICYMAKING UNDER COMPLEXITY
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THE WAYS OF THINKING (in solving a complex system)
• OUTPUT BOUNDED RATIONALITY
• PROCESS ORIENTED RATIONALITY
• UNDERSTANDING THE WHOLENESS BY LEARNING
CREATING RATIONAL POLICY TO PERFORM
CREATING ANTISIPATIVE AND ADAPTIVE POLICY TO EVOLVE
POLICYMAKING UNDER COMPLEXITY
PERFORMING CAN BE UNEVOLVING,
BUT EVOLVING CAN BE PERFORMING
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Input-output model
PRECISE CALCULATION: Output processed from inputs
because …… Process is perfect (black box) Environment is stable
POLICYMAKING UNDER COMPLEXITY
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RATIONAL POLICYMAKING (in Input-Output model)
POLICYMAKING UNDER COMPLEXITY
SUCCESS !Because….. Process is
perfect, Environment is
stable, to: - running the inputs
- producing the output
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Information feedback model
HIGH STABILITY: always seeking the reference
Process ……like orchestra Autonomous control Correcting the discrepancy Seeking the reference
POLICYMAKING UNDER COMPLEXITY
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RATIONAL POLICYMAKING (in information feedback model)
SUCCESS !Because….. Capacity to control
the rhythms by design, to:
- producing the output
- maintaining the reference
POLICYMAKING UNDER COMPLEXITY
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Adaptive feedback model
CONTINOUS EVOLVING: by anticipative and adaptive capability
process……like surfing and herons flying responsive toward environment anticipative and adaptive toward environmental change
POLICYMAKING UNDER COMPLEXITY
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ANTICIPATIVE POLICYMAKING (in adaptive feedback model)
SUCCESS ! Because……. Capability
gained by learning to surf at the edge of wave
POLICYMAKING UNDER COMPLEXITY
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ADAPTIVE POLICYMAKING ( in adaptive feedback model)
SUCCESS !Because….. Capability gained
by learning to mutually maintaining the direction, distance and speed without design
POLICYMAKING UNDER COMPLEXITY
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INNOVATION POLICY UNDER FREE MARKET COMPLEXITY
EASINESS! to.. Escalating the competition Degrading the resources Creating the self interest
DIFFICULTIES ! To.. Anticipating and adapting the pressure of
disappointment of the common
Free market complexity
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The pressures of disappointment of the common
FIVE TYPES...
Expectation differing from reality
Disputes arising from unfair practices
Acceleration creating deterioration
Solution creating problems
Resistance and delay
INNOVATION POLICY UNDER FREE MARKET COMPLEXITY
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INNOVATION POLICY UNDER FREE MARKET COMPLEXITY
The slowness of past recovery: Indonesian experience
The slowness of recovery can be arranged and displayed systematically
How to understand it…
1. What rules systemically underpinning the slowness of recovery
A systemic model
2. What basic structure determining the strategic change
A point of leverage
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INNOVATION POLICY UNDER FREE MARKET COMPLEXITYSystemic obstacles: Indonesian experience
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Paradigm sift from mechanism toward organism
INNOVATION POLICY UNDER FREE MARKET COMPLEXITY
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Adaptive Innovation policy model (organic perspective)
Strong body with high calorie but lack of nutrition, can be unhealthy (due to lack of antibody)Strong economy with high power of financing but lack of technological innovation, can be unhealthy economy (due to lack of competitiveness)
INNOVATION POLICY UNDER FREE MARKET COMPLEXITY
A simple rule in the model
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Adaptive innovation policy model (Indonesian case)
INNOVATION POLICY UNDER FREE MARKET COMPLEXITY
Increase in financing for innovation to: softening the competition pressure, and; cutting the protection
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Adaptive innovation policy (simulation results)
INNOVATION POLICY UNDER FREE MARKET COMPLEXITY
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PAST EXPERIENCES AND FUTURE POLICY
NEEDS
FIRST, innovation policy making in complex economic system needs an ‘adaptive innovation policy model’
SECOND, dealing with complexity of free market competition needs an adaptive strategy to apply free market along with to salvage the domestic interest.
THIRD, a possible future policy problem (in Indonesia) would be low domestic supply due to lack of competitiveness in the free market.
POLICY NEEDS, ‘innovation policy for equitable development’, in addition to implementing ‘growth policy by capital investment’
innovation policy instrument on HRD to create innovator in private sector, especially innovation-based SMEs.
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PHRASE(The nature is a wise
teacher)
THANK YOU
For the Sustainable future by equitable economic development