Innovation: The Most Important Step in the Way Forward

Beijing, People's Republic of China, 21 May 2008
  • Remarks by Ambassador Juan Carlos Capuñay, Executive Director, APEC Secretariat
I would like to thank the State Council and Ministries of the People's Republic of China for including me in these timely discussions. Today's forum includes leaders from a range of industries and one can anticipate presentations that are both practical and inspiring. It is also an excellent opportunity to share with you some of APEC's work, which has been successful largely as a result of such innovative exchanges
APEC operates from within a context that is much different than at its inception in 1989. Trade negotiations at Doha rest in a precarious stage, the world's financial system has been shaken by rapid fluctuations of a traditionally stable currency; a global food shortage has exacerbated the situation; the energy market, especially those non-oil producing countries, has been impacted by a dramatic increase in the cost of oil; traditional superpowers are waning while new economic powers are emerging; and the consequences of climate change can be seen throughout the world.
If the situation seems daunting, then it is equally exciting. Necessity is the mother of invention; and it is only in overcoming obstacles do we discover the capacity of the human mind and spirit.
For APEC member economies, globalization represents a wealth of opportunities for business, trade and investment. Of course, each of these is dependent on information and technology. Fair trade, structural reform and the ability to monitor and respond to issues of human security are constantly being streamlined and made more efficient through advances in technology. Strategic regional partnerships and bridges across the development gap are conceivable only by virtue of the ability to communicate quickly and efficiently.
When it was founded in 1989, APEC was a 12 member organization seeking to promote sustainable economic growth through trade and investment liberalization and facilitation throughout the Asia-Pacific region. APEC has since grown to include 21 members and is home to both developed and developing economies in the Americas and Asia. Members currently account for half of world trade, 41 per cent of world population and 55 per cent of world GDP.
Faithful to its original mandate, APEC has experienced tremendous gains since its formation. From 1994-2004, 195 million new jobs were created in the region including 174 million in lower-income economies, and 165 million people have been lifted out of poverty - a reduction of one third. Exports increased by 113 percent and foreign direct investment by 210 percent.
Its achievements have been remarkable and have been driven mostly by market forces. While governments want to promote economic growth and increased standards of living, it is business which constitutes the engine of growth; carrying out the activities that stimulate economic growth; and leading the way in the development and adoption of new technologies.
Imagine that in 1990, an average of only 0.6 percent of those living in APEC member economies were cellular subscribers and only 0.08 percent used the internet. Within a space of 15 years, cellular subscribers rose to an average of 55 percent and internet usage to 30 percent. Among the most developed APEC economies, cellular phone subscriptions have reached well over 83 percent and internet use over 44 percent.
Although the benefits of technology have enabled the strongest players to thrive amid rapid change, this has not always been the case. While connectivity has increased ease and opportunity in the business and lifestyles of some, the converse has been true for others. Developing economies have only a 22 percent rate of cellular subscription and internet usage of as little as 8 percent. In effect, the majority of those in developing economies are excluded from the global marketplace and if this is not addressed, the negative impact will proliferate over time. Predictably, these same economies have the lowest rates of youth literacy and the lowest levels of income.
We have recognized that for APEC to achieve its goals, we must also consider the social dimensions of trade. To the extent that people and innovation thrive from within solid economies, economies thrive on the innovation of people.
APEC Peru 2008 is taking what might be considered an alternative approach. In adopting a social dimension, APEC is finding solutions to many of the challenges facing its own agenda.
Since 1990, APEC has been committed to facilitating development of an information infrastructure across the Asia-Pacific. In that time, many strategies and initiatives have been developed to assist member economies in working toward the establishment of an Asia-Pacific Information Society.
Ten years later, in 2000, Leaders met in Brunei and marked a progression in their commitment, aspiring to a policy framework that would enable the people of urban, provincial and rural communities in every economy to have individual or community-based access to Internet information and services by 2010.
Less than two years from this target date, one is able to observe a series of achievements toward this admirable goal. Telephone main-lines in some developing economies have more than quadrupled in a space of 15 years. People in remote locations are able to exchange lessons and experiences with those in the most bustling urban settings - precisely because they are able to form business partnerships and have access to the same markets. And internet rates have tripled throughout the region - a specific goal set by Leaders in Brunei.
Last month, in recognition of progress toward existing goals, APEC Telecommunication Ministers met in Bagkok and set before themselves an additional challenge and declared their ambition to achieve universal access to broadband by 2015. Not only are we convinced that this is possible: given our track record, we believe it is likely.
This will also have a transformative effect on the landscape in which we operate. It is an achievement which, in itself, presents new and exciting challenges: how can we enable the majority to capitalize on access to information and the possibility of boundless interaction? How can we enable all members of society to contribute and experience the economic benefits available to them?
The vision of the APEC 2008 Chair, "A New Commitment to Asia-Pacific Development", is founded on three pillars: governments, private partnerships and international financial institutions. A fourth - civil society - is also visible.
The potential influence of small and medium enterprises, regional economic integration and open trade suggests that opportunities are ripe in the Asia-Pacific - provided that we have the foresight to spot potential where it is not yet apparent and the courage to encourage innovation. In fact, assisting the entry of smaller players to the global market is a precursor to long-term sustainable development.
To illustrate, small to medium enterprises account for over 80 percent of all enterprises and employ as much as 60 percent of the work force in the APEC region. Yet, they account for between only 30 and 35 percent of exports. The fact is incongruous and points to several pertinent facts. Firstly, the potential for economies to increase foreign revenue sources is enormous. Secondly, the factors which have impeded SMEs from capitalizing on such opportunities in the past must be addressed.
The "Digital Divide" is, in some cases a veritable gulf, alienating those who lack either access to or skills in information and communication technology. To bridge the development gap in the most authentic way, access must be matched with ability. Data processing is an unparalleled medium for entry into the global arena and the US pilot project "Freedom Digital Initiative" has been of great benefit to the small and micro enterprises of Peru.
APEC Digital Opportunity e-Commerce centers, other APEC initiatives, have provided information and communication technology related training for small and medium size businesses. Member economies including Chile, Indonesia, Papua New Guinea, Peru, Philippines, Thailand and Viet Nam are being enabled to take full advantage of the business opportunities afforded by the internet.
In keeping with the United Nations' Millennium Development Goals, we acknowledge the tremendous difference that education can make, equipping young people to thrive in a rapidly changing world. In a knowledge-based economy, comparative advantage has come to mean competitive advantage. To the citizens of a global world, skills are the common currency and innovation an asset.
One can clearly see the ways in which the combination of technology and innovation have reduced time and costs associated with business.
Tariffs in APEC economies have decreased from 17 per cent in 1988 to six per cent in 2004. And more efficient customs procedures, single window systems, progress towards paperless trading, and other trade facilitation measures are saving businesses millions of dollars each year.
The internet has been a major contributing factor in the process of structural reform, reducing both the time and cost of investment and cross-border trade. Canada, as an example, has streamlined border customs procedures considerably by receiving electronic information in advance. And China has facilitated a number of government procedures in addition to increasing interaction between government and citizens, via the internet.
An authentic private-public sector partnership could be the main resource in advancing development through innovation and technology. Partnerships between private and public sectors are mutually beneficial. Private companies are willing to drive technical innovations and invest in the development of the economy's infrastructure, provided that governments create environments that are conducive. Apart from dramatic visible and immediate benefits to communities, foreign direct investment increases competition as well as financial and other services.
It is up to governments to provide stability and to create a friendly environment to facilitate the development of private initiatives. It is only the private sector which guarantees the steady development and growth of economies.
It is up to international institutions to facilitate a comprehensive regional approach to economic cooperation. For example, APEC supports EDNET - the Education Network - in conjunction with the World Bank and the OECD. This initiative fosters learning systems as a means of supporting sustainable economic development across APEC member economies. This year particular emphasis has been placed on languages, math and science; and technical skills. Similarly, APEC and the World Bank support the Global Distance Learning Network, an effort toward capacity building among SMEs in the Asia-Pacific.
APEC is committed to enabling trade, liberalizing markets and strengthening intra-regional relationships. This is how economies are strengthened and sustained. And solid economic environments enable people to fulfill their own needs. The fruit of our labor is revealed slowly but the results are rewarding. Indeed, APEC has empowered people and improved lives.
Today's innovation will transform tomorrow's challenges into achievements. This is how we will realize our goals - and how we will realize them in our own time.