Future of Innovation Clusters in Asia

By Frank-Jürgen Richter

May 23, 2024

Innovation clusters have long been recognized as powerful engines of economic development and productivity. These clusters, characterized by a dense concentration of interconnected businesses, suppliers, and institutions in a particular field, play a pivotal role in fostering entrepreneurial spirit, boosting productivity, and – ultimately – propelling a nation’s economy forward. As Asia continues to solidify its position as a powerhouse of innovation, understanding the dynamics of innovation clusters and devising strategies to support them will be paramount to sustain growth and competitiveness in the region.

To realize this, governments must adopt a multifaceted approach encompassing regulatory reform, investment in education and infrastructure, and promoting interdisciplinary collaboration.

By investing heavily in biomedicine, energy, and ICT, governments can capitalize on cross-sector synergies and drive transformative innovation. Additionally, embracing deep science waves and supporting fundamental research can position Asia as a global leader in emerging technologies, further enhancing productivity and driving sustainable economic growth for years to come.

Government Support for Enhancing Labor Productivity Growth

Governments across Asia must recognize the significance of innovation clusters in driving labor productivity growth and formulate robust policies to support their development. 

One key aspect of government support lies in creating an enabling regulatory environment that fosters innovation and entrepreneurship through streamlined bureaucratic processes, less red tape, and incentives to encourage the establishment and growth of innovative ventures within clusters.

As early as 2001, the Japanese government initiated an industrial cluster policy to promote the concentration of specific industries in designated regions nationwide, resulting in the emergence of the Tokyo-Yokohama region as a global hub for science and technology clusters. Spearheaded by the Ministry of Education, Culture, Sports, Science, and Technology (MEXT) and the Ministry of Economy, Trade, and Industry (METI), this policy provided tax breaks and grants to catalyze the growth of innovative enterprises within these clusters.

Next, investing in education and skills development is crucial for nurturing a workforce equipped with the competencies needed to thrive in cutting-edge industries. Collaborations between academia, industry, and government can facilitate the design of tailored educational programs that address the evolving needs of innovation clusters, ensuring a steady supply of skilled labor.

In Singapore, for example, the government launched the “Teach Less, Learn More” initiative in 2004 to shift pedagogy away from rote learning toward deeper conceptual understanding and problem-based instruction. This was paired with the “Learn for Life” initiative, introduced in 2018, to promote greater flexibility in teaching, learning, and assessment, fostering opportunities for lifelong learning both inside and outside the traditional classroom setting.

In alignment with these efforts, the Singaporean government established the Lifelong Learning Endowment Fund in 2001 under the Lifelong Learning Endowment Fund Act. This fund, bolstered by a government injection of US$357 million, now totals US$3.3 billion and is utilized to support endeavors encouraging Singaporeans to embrace lifelong learning, providing them with assistance and opportunities to do so.

Integration of Massive Investment in Biomedicine, Energy, and ICT

The convergence of biomedicine, energy, and information and communication technology (ICT) presents unprecedented opportunities for driving innovation and economic growth in Asia. Harnessing the full potential of these synergies requires governments to adopt a holistic approach to tech clusters that promotes interdisciplinary collaboration and cross-sectoral innovation.

One strategy is to establish specialized innovation hubs or technology parks that bring together stakeholders from diverse fields to work on interdisciplinary projects. These hubs can serve as focal points for research, development, and commercialization efforts, facilitating the integration of biomedicine, energy, and ICT technologies.

Moreover, incentivizing public-private partnerships and providing targeted funding for collaborative research initiatives can accelerate progress in key areas such as personalized medicine, renewable energy technologies, and smart infrastructure. In China, for example, the government has invested around US$600 million to support R&D in biotechnology, while its “Made in China 2025” plan targets biopharmaceuticals as a key sector for global growth. 

Impact of Deep Science Waves on Productivity

The emergence of deep science waves, characterized by breakthroughs in fundamental scientific research, has the potential to revolutionize productivity and economic growth in Asia. Deep science encompasses disciplines such as quantum computing, nanotechnology, and synthetic biology, which have far-reaching implications across various industries.

Governments can support and even catalyze deep science waves by investing in fundamental research, funding interdisciplinary collaboration, and fostering a culture of innovation and risk-taking. Long-term, curiosity-driven research is the groundwork for future technological advancements that ensure that Asia remains at the forefront of innovation. Furthermore, policies that encourage technology transfer and commercialization of deep science discoveries can translate scientific breakthroughs into tangible economic benefits. 

Examples are already emerging all over the region. In Thailand for example, the government has developed a comprehensive roadmap for nanotechnology spanning a range of components such as nanosensors for diagnosis and screening, vaccines and nanomedicine, nanotechnology for drinking water, safety and risk assessments, and so on.  

By facilitating the transition from lab to market, governments can unlock the full potential of deep science waves and drive productivity growth in key industries.

Photo Caption: Governments across Asia must recognize the significance of innovation clusters in driving labor productivity growth.