ALIGNING INCENTIVES TO INVEST, INNOVATE, AND GENERATE EMPLOYMENT
prices, small customer bases, and low quality of service. The consequences for the rest of the economy have been severe, especially for the development of an advanced information technology (IT) sector and outsourcing industries (box 7.5). In both cases, local political-economy considerations played a role in governments’ decisions on whether to foster or limit competition in the sector. An attractive investment climate can also facilitate the entry of export-oriented
BOX 7.6
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FDI, which can be a vehicle of knowledge transfer.
Highly innovative firms in MENA In many countries in the region, a subset of firms has shown a high degree of innovation and the ability to export their products (see box 7.6). Although such firms are exceptional, they constitute important role models. Successful examples of innovation by firms in the region do not seem to be the
From emerging role models to innovation clusters: The experience of firms in Lebanon and Morocco
The example of two Moroccan firms illustrates the potential of innovation clusters. Such fi rms are becoming important role models for educated technical professionals in Morocco. Hightech Payment Systems (HPS) was founded in 1995 by a group of Moroccan consultants and experts in monetics (electronic banking). More than 90 percent of its products are exported to well over 100 clients in 60 different countries in Europe (26 percent), the Middle East (36 percent), Asia, the United States, and Africa; it had revenues of more than US$30 million in 2010. The domestic market represents less than 10 percent of the total. With branches in Paris and Dubai, it has become a global company with three regional offices and two joint ventures in Bahrain (GPS) and in Mauritius (ICPS). The PowerCARD software currently operates 100 electronic fi nancial transaction sites, which manage a total of 300 financial institutions. Its human capital is the vital key to its success: its labor force grew rapidly from 179 in 2009 to 350 in 2011, most of them under 35. They are recruited mostly from the Ecoles d’Ingénieurs in Morocco. These university graduates have satisfactory performances once they receive specifi c training related to monetics, which is not taught anywhere in the country. Returning Moroccans from the diaspora have proved central to the company’s successful innovative strategy. The company has collaborators from 60 different countries. Its R&D budget reached
10 percent of sales, which compares favorably with its competitors. R&D personnel represents 35 percent of its total employees, and all of them are Moroccans. Nemotek, established in 2008 by the Caisse de Dépôt et de Gestion, is located at the new Technopolis Park near Rabat. With its worldwide customer portfolio, Nemotek is considered one of the leading manufacturers of wafer-level cameras and is a world leader in microcamera technologies. In fact, it was the fi rst company to buy a Micro Via Pack (MVP) license from Tesseraa and the fi rst to industrialize it. Signifi cantly, it benefi ts from relatively high intellectual property protection compared to Asia. R&D is conducted in partnership with the Moroccan Association for Science, Innovation and Research, a public foundation specializing in nano materials, microelectronics, and biotechnology. Nemotek relies heavily on the Moroccan diaspora: it has been able to attract numerous highly qualified nationals back to the country, turning the “brain drain” into a “brain gain.” It draws on other foreign competencies by employing engineers from all over the world. MultiLane SAL is a Lebanese company that develops technology and products for the optical communication market. MultiLane’s products support the global tier-1 suppliers of communication infrastructure and enable leading semiconductor companies to offer communication equipment for the next-generation network. Customers include (continued next page)