University industry linkages in Egypt: a political economy approach

Abstract

The Egyptian Science, Technology and Innovation (STI) sector has witnessed several institutional changes in the last ten years. It is slowly becoming more oriented toward satisfying the industrial Research and Development (R&D) needs with a more competitive approach to R&D expenditure. Meanwhile, the state has been in political turbulence since 2011 with a subsequent economic/financial crisis. In this thesis, we ask how the institutional changes that seek to stimulate Technology Transfer (TT) from the R&D institutions to the industrial sector can be understood within a broader political economy context. We break down our question into four main investigations. The first is concerning the economic rents and governance mechanisms as dictated by the state’s industrial policy. The second investigates the relationship between the state and the industrialists given the distribution of power among economic factions while considering changes, if any, in the Political Settlements (PS) before and after 2011. The third question describes the innovation patterns in the manufacturing sector and the financial and knowledge flows within the National System of Innovation (NSI). Finally, we present a case study for the TT Offices (TTOs), providing a narration of their institutional weaknesses. For our analysis, we use a hybrid framework by merging the PS and the NSI approaches. The former is used to check for the compatibility of the industrial policy in Egypt with the prevailing distribution of power among the state factions while the second provides a framework for analyzing financial and knowledge linkages in the Egyptian NSI as well as the University-Industry Linkages (UILs). The research methodology adopted in this thesis is mixed and involves literature review and qualitative analysis of data from conducted interviews. The methodology first relies on analyzing the available literature on the industrial policies and political economy in Egypt. The investigation then proceeds to give a descriptive account of the Egyptian NSI from which we move forward to present the case for TT from university to industry by conducting five semi-structured interviews with officials from TTOs belonging to R&D institutions. Results of our investigation reveal that the variation in manufacturing sector performance is linked with the distribution of economic rents by the state to the capitalists, in return of political support provided by the latter to the former. Hence, in line with the predictions of the PS theory, the industrial policy failed to realize higher competitiveness of the Egyptian manufacturing sector in the international market as the supporting industrial faction (capitalists) had accumulated enough power to weaken the state’s capacity of implementing its active industrial policy. We note that the variation in sector performance reflects not only growth but also innovation rates. While sectors receiving higher economic rents show less rates of innovation, except for beverage industry, those with less rents show the highest 3

innovation rates. The core contribution of the thesis comes with presenting the case for TTOs in Egypt which were recently established to induce UILs. Conducted interviews reveal that the STI policy is still in an early phase of formulation and that the organizational capacity of the STI actors remains low and constricted by various institutional and legal barriers. We infer, from other country experiences, that the PS in Egypt, which has persisted for a long time and without significant changes after 2011, does not indicate substantial changes in the power distribution among its state factions and hence, in the incentives structure and governance mechanisms towards a successful implementation of an industrial policy. Hence, we conclude that while the STI institutions are being reformed slowly, the prevailing PS and the associated inclination towards neoliberal economic policies in which the STI sector is being shaped in Egypt do not allow for an efficient TT through the free-market mechanisms, as perceived by the state.