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December 3, 2013

Why Centers of Innovation Matter

Posted by Upendra Kohli (View Profile | View All Posts) at 8:50 AM


Masdar City Development Full length [Source: http://www.youtube.com/watch?v=3gapNu7D7xU]

I'm watching the development of Masdar City with great interest. This booming scientific community, just outside of the U.A.E. capital of Abu Dhabi, is on its way to becoming another global innovation hub.

What's different about Masdar's innovation story is that it has occurred pretty much overnight. I exaggerate, of course, but not too long ago this hub was a vast stretch of desert. Now it's an ecologically friendly community where alternative energy is at the top of the innovation list. That's quite remarkable given the Gulf's history of providing the world with oil and natural gas. It goes to show you that being successful in one sector doesn't limit you from creating market-moving changes in another.

There's been a cordial debate for the better part of a decade as to what are the ingredients of a successful technology and innovation hub. One side says it's about "nature": These hubs evolve organically over time. Others say it's more about "nurture." With the right planning, vision, location, and funding, anyone can create a world-class hub.

Masdar City definitely falls into the second category. Its success makes a compelling case that innovation hubs can be the creations of joint government and business efforts. But where Masdar differentiates itself from other government initiatives is that it's dedicated to commercially viable enterprises. If these renewable, clean energy innovations and their start-up companies can't make a market for themselves, they're not coddled by a government agency. It's sink or swim.

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October 18, 2013

How the Private Sector Boosts Emerging Markets

Posted by Upendra Kohli (View Profile | View All Posts) at 6:25 AM


Gates: 'No Doubt' Wealthiest Have to Pay More Taxes [Source:http://www.youtube.com/watch?v=a1oVeU3igrY]

For decades, public aid agencies have raised money and attempted to boost the economies of emerging markets. Their formula was fairly standard: They donated funds to non-governmental organizations (NGOs) that in turn funded various local projects.

But two things happened. First, the global economy soured and a lot of the money raised by public aid agencies dried up. Second, NGOs began to see the limitations of what public funds could do to make a difference in the emerging markets. That's because public sector funding usually involves a specific goal like professional training in a certain industry.

Public efforts obviously had the best of intentions. But economists will tell you that an attempt to build a market artificially by training people for a certain task only goes so far. It's more effective to allow the forces of supply and demand to take hold. One of the reasons the emerging markets have become so vibrant is that private funding is becoming more popular. Unlike public sources, private funding usually targets an economy in such a way that it creates demand for goods and services.

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