Jordan Innovation Policy - A Practical Guide to Wealth Creation

Jordan Innovation Policy

A Practical Guide to Wealth Creation

David Tee

April 2006

© EJADA - 20 AUGUST 2016 2

Contents1 Introduction.................................................................................................................................................................4

1.1 Background............................................................................................................................................................................4

1.2 Acknowledgements............................................................................................................................................................. 4

2 Executive Summary...................................................................................................................................................52.1 Innovation Issues in Jordan...............................................................................................................................................5

2.2 Recommendations...............................................................................................................................................................6

3 Definitions....................................................................................................................................................................83.1 Wealth Creation...................................................................................................................................................................8

3.2 Innovation........................................................................................................................................................................... 10

4 Research and Development...................................................................................................................................134.1 Overview..............................................................................................................................................................................13

4.2 Innovation versus R&D.....................................................................................................................................................13

4.3 Innovation Continuum......................................................................................................................................................14

4.4 R&D Links to Business & Industry..................................................................................................................................15

4.5 Recommendations.............................................................................................................................................................16

5 Education and Culture............................................................................................................................................195.1 Overview..............................................................................................................................................................................19

5.2 Education Systems............................................................................................................................................................ 19

5.3 Vocational Training...........................................................................................................................................................20

5.4 Cultural Impact..................................................................................................................................................................20

5.5 Socioeconomic Impact.....................................................................................................................................................21


6 Laws and Regulation............................................................................................................................................... 256.1 Overview..............................................................................................................................................................................25

6.2 Time to Trade.................................................................................................................................................................... 25

6.3 Consumer Protection........................................................................................................................................................26

6.4 Taxation...............................................................................................................................................................................26

6.5 Intellectual Property Rights (IPR).................................................................................................................................27


7 Financing....................................................................................................................................................................297.1 Overview..............................................................................................................................................................................29

7.2 Availability of Funding in Jordan..................................................................................................................................29


8 Management..............................................................................................................................................................328.1 Overview..............................................................................................................................................................................32

8.2 Core and Periphery...........................................................................................................................................................32

8.3 W(h)ither Manufacturing?............................................................................................................................................... 34

8.4 Value add.............................................................................................................................................................................34

9 Business Support...................................................................................................................................................... 359.1 Overview..............................................................................................................................................................................35

9.2 Jordan Innovation Centres..............................................................................................................................................36

9.3 Business and Professional Organisations.....................................................................................................................38


10 Implementation........................................................................................................................................................3910.1 Co-ordinated Activities....................................................................................................................................................39

Annex 1: Development of Jordan Innovation Centres.......................................................................................... 41

Annex 2: Bibliography................................................................................................................................................... 45

APRIL 2006 JORDAN INNOVATION POLICY


Figures and TablesTable 1: Components of Jordanian Wealth Creation.......................................................................................................................9

Figure 1: Innovation in Context...........................................................................................................................................................11

Figure 2: The Innovation Cloud............................................................................................................................................................12

Table 2: Comparison of R&D and Innovation................................................................................................................................... 14

Figure 3: The Innovation Continuum..................................................................................................................................................14

Figure 4: The Separate Nature of R&D and Business.....................................................................................................................15

Figure 5: Commercial Research within the Pharmaceutical Industry.......................................................................................15

Figure 6: Jordanian Education Approach.......................................................................................................................................... 20

Figure 7: Employment Preference by Country................................................................................................................................ 21

Figure 8: Risk Taking and Innovative Ability of Different Groups..............................................................................................22

Figure 9: Time to Trade - UK and Jordan......................................................................................................................................... 25

Table 3: Types of Business Financing.................................................................................................................................................29

Figure 10: Availability of Financing....................................................................................................................................................30

Figure 11: A Vertically Integrated Business......................................................................................................................................32

Figure 12: Core and Periphery.............................................................................................................................................................33

Figure 13: Business Support Map.........................................................................................................................................................35

Figure 14: Positive Feedback............................................................................................................................................................... 37

Figure 15: Integrated Approach to Wealth Creation......................................................................................................................39


1 Introduction

1.1 BACKGROUND

This document is the result of two years immersion by the author in the start-up,

innovation and entrepreneurial business environment in Jordan. In addition to this

exposure, workshops and interviews were conducted with many people concerned with

policy making or policy usage; academics, government officials, large and small business

owners, international and national NGOs all contributed significantly to the findings

presented here.

Rather than produce a 200 page book filled with densely packed text, the approach

taken to the structure of this Policy document was one of practical usage. The author’s

aim is to create a “guide book” for those people involved in further developing

innovation, entrepreneurship and wealth creation in Jordan. To this end, the

document’s text is succinct and, hopefully, to the point. Little space is devoted to

theoretical or abstract concepts. The focus is on realistic, practical solutions to the real

issues that exist today.

Responsibility for adoption of recommendations and implementation lies with the

Jordanian institutions already involved with innovation.

1.2 ACKNOWLEDGEMENTS

Many people have contributed to the conclusions in this document. Dr Fawaaz Elkarmi

organised two workshops on innovation with many leading Jordanian figures from the

public and private sector. His reports provided lively discussion and many insights on

the situation.

Interviews with, amongst others, HE Amr Majali, HE Mahmmoud Ababneh, HE Dr Moayad

Samman, HE Dr Khaled Elshuraydeh, HE Yarub Qudah, Mr Amjad Attar, Dr Munif Hijazi,

Dr Zaki Ayoubi, Mr Mazen Khalaf, Eng Omar Abuwishah, Eng Omar Hamarneh, Mr Tareq

Kour and Mr Simon Bojsen-Moller provided first hand information on the situation.

Thanks go to Dr Abdel-Rahim Jallad, Mr Mohammed Thogan Hindawi, Steven Lee,

Rodney Osborn, Bill Winning and many other colleagues from EJADA who contributed

their valuable perceptions to the final document.

Additional help and insight was provided by Jacques Pronk, Philippe Vanrie, Nadia

Simion and other staff members of the European Business and Innovation Centre

Network (EBN – www.ebn.be) during two European study tours and an inward mission.

David Tee, April 2006

http://www.ebn.be


2 Executive Summary

2.1 INNOVATION ISSUES IN JORDAN

2.1.1 General Issues

Job creation and poverty alleviation are driven by wealth creation.

Wealth creation is driven by the intelligent exploitation of natural, human,

technological, financial and knowledge resources.

Innovation – as the commercial realisation of new ideas – is a strong catalyst to

creating wealth.

Traditional low-value commodity industries are being pressured by low-wage

economies in the East.

Moving towards higher-value products and services requires an increase in skill

levels within the workforce.

2.1.2 Jordan Specific Issues

Research and Development in Jordan is mainly operating at the theoretical level,

with little application of the research being put to use within Jordanian industry.

Attitudes to risk taking and working for oneself are not high leading to a preference

for secure government jobs where little wealth creation can occur.

Laws and regulation provide a reasonable framework, although policing of many

laws is not well performed. There is a danger that new regulation could stifle

innovation.

Financing of innovative business is difficult due to the risk averse nature of most

banks, little in the way of seed capital, and no “Business Angels”1 nor venture

capital.

Management approaches are very traditional leading to large vertically integrated

companies; an evaluation of core business would enable more efficient and more

competitive businesses.

Business support is available in abundance from a wide range of national and donor-

funded organisations, but coordination is poor and communication with their target

audience inadequate.

1 Business Angels are wealthy individuals prepared to take higher risk by investing in

start-up companies



2.2 RECOMMENDATIONS

2.2.1 Research and Development

Increase awareness amongst the private sector of all publicly funded research in

universities and research establishments.

Encourage one-to-one exclusive deals between academia and business.

Rewrite university and research establishment regulations to allow academics to

own businesses, share financially in the results of their work.

Change the criteria for promotion to include the commercialisation of research in

addition to traditional academic publishing.

Establish a network of Technology Transfer Units within every research focused

university and other research establishments. Ensure coordination between these

TTUs via the Higher Council for Science and Technology.

Update Article 188 of the Companies Law (regarding the 1% contribution) to ensure

more private sector involvement in the use of the money.

2.2.2 Education

Ensure any education reform is focused around the student and their learning needs.

Develop a system where students learn how to solve problems though applying

theories and principles rather than just learning facts. Test learning with project

work more than simple exams.

Reform the content of university courses through collaboration with business and

industry; find out what business needs and teach this.

Consider introducing the Young Enterprise scheme into high schools to give students

hands on experience of business.

2.2.3 Laws and Regulation

Reform laws that inhibit innovation and entrepreneurship.

Create a one-stop-shop for all company establishment needs, not just registration.

Reconsider the requirement for mandatory membership of professional and business

associations.

Devise creative legislation that both solves urgent needs within the country and

encourages innovation by business. For example, consider a requirement for all new

buildings to have Jordanian manufactured water and energy saving devices.



2.2.4 Financing

Ensure any new tax regulation does not negatively impact investment in innovative

new businesses; on the contrary, consider implementing regulation that positively

encourages such investment, perhaps via double tax relief.

Urgently set up the Jordan Business Angels Network (JoBAN) to fill the investment

gap that currently exists between seed funding and venture capital.

2.2.5 Business Support

Focus on developing the Jordan Innovation Centre concept and network to ensure

that entrepreneurs have places to commercialise their ideas.

Develop the JICnetwork into an umbrella organisation for all aspects of innovation

within Jordan, giving it the remit to liaise with other government and NGOs to

implement the recommendations presented in this policy document.

2.2.6 Implementation

The success of these policy recommendations relies on the coordinated efforts of many

Jordanian and donor organisations. Whilst the author is fully aware of the difficulties of

such coordination, it cannot be stressed enough the importance and urgency of such

action.

It is strongly recommended that an umbrella organisation – perhaps an existing

Jordanian establishment, or perhaps a new one - should be given the remit to deliver

this integrated approach to enterprise development. And it should focus not just on

established businesses, but also on the innovative start-ups which will form the

backbone of the economy in the future.


3 Definitions

3.1 WEALTH CREATION

According to the 18th century Scottish economist and moral philosopher Adam Smith,

wealth creation is “the combination of materials, labour, land, and technology in such a

way as to capture a profit” (Wikipedia.org). However, in the 21st century we must add

knowledge to this list of combinations.

Using this definition, how well positioned does Jordan appear to be for creating wealth?

Area Comment Exploitation Potential2

Materials As is commonly known, Jordan has ascarcity of natural resources. This scarcitymakes it hard to create wealth from thenatural environment. Those areas wherepossibilities exist – potash, stone, DeadSea materials – are currently beingexploited. Tourism, it has been argued, isJordan’s only other natural resource, andopportunities exist for its improvedexploitation.

*** *

Labour Jordan has a large available labour force.But unfortunately it is also mostly anunskilled labour force. Also, despiteproducing large numbers of engineers,scientists, doctors etc each year from itsuniversities, many people now go abroadto find fulfilling work.

** ****

Land All the available agricultural land iscurrently exploited for crop production.The rest is desert and generallyinhospitable for agricultural development.A lack of water is a major issue in furtherexploiting the land for wealth creation.

**** *

Technology Despite the number of universities andresearch centres, and IT and engineeringgraduates, the vast majority of Jordan’stechnology is imported. Opportunitiesexist to reverse this trend.

* ****

Knowledge Knowledge becomes more available witheach passing day. The internet providesaccess – for those who know how tosearch – to incredible amounts ofinformation and knowledge. Jordan needsto learn how to leverage this knowledgefor its own wealth creation.

* ****

2 * = low potential; ***** = high potential



Table 1: Components of Jordanian Wealth Creation

The picture does not at first sight appear to be too positive. Materials and land are

being exploited to their maximum, although there is significant room for improved

production efficiency, especially in the Jordan Valley (where the Israeli side of the

Jordan River is on average six times more productive than the Jordanian side). So, the

emphasis must be on labour, technology and knowledge.

But Jordan is also under increased pressure in these areas from both the East and West.

3.1.1 Low-cost East

The low-wage economies of the East - India, China and all points in between – are

making it increasingly hard for labour intensive Jordanian industry to compete in the

global economy. In addition, World Trade Organisation (WTO) agreements will only

worsen the situation as tariffs, quotas and trade barriers gradually disappear making it

easier for Eastern firms to export their low-cost products around the world.

For example, in the garment industry Jordan is currently more competitive than some

other countries due to its duty and quota free access to the US market. The (mainly)

foreign companies operating here do so simply to make a few percent more profit than

elsewhere. As the WTO forces a “level playing field” on all countries, Jordan will lose

its advantage and China (and India, Vietnam, Cambodia, Laos) will become the

preferred locations for manufacture. At some point in the not so distant future the

foreign garment manufacturers will see that it makes more sense to manufacture

elsewhere. And they will quietly leave.

[In fact, much of the perceived benefit of such manufacturing in Jordan is actually a

falsehood, as about 75-80% of the workers in the Jordanian garment industry are

Chinese, Bangladeshi, Sri Lankan or Indian. The majority of their wages leave the

country and therefore are not cycled around the local economy.]

3.1.2 Knowledge-lead West

In the West, the US and Europe are increasing their efforts to reorient their economies

towards becoming knowledge focused. Their traditional labour-intensive industries are

also under threat from the low-wage Eastern economies. All statistics show an

employment trend from agriculture and industry towards services. And services tend to

be where the knowledge economy thrives.

3.1.3 Stuck in the middle but fighting back

Jordan finds itself in the middle of these challenges, both geographically and

economically. It cannot compete with the low-wage East, yet finds itself many years

behind the knowledge-based West.



In order to survive, Jordan must find its own niche in the global economy. It must first

identify, and then focus on what it can profitably deliver given its available wealth

creation components. And it must develop unique saleable skills that the world wants to

buy. For example, its position as probably the most western-friendly Middle Eastern

country should give Jordan a unique advantage in encouraging trade between these

blocs.

This process is not short-term. It will take time to increase the value of the Jordanian

labour force, develop its own globally valuable technologies, and leverage knowledge to

its own advantage. But the external challenges facing the economy do not provide much

time, nor much flexibility. Short-term opportunities exist to add valuable services to

existing manufacturing business. For example, Design Jordan is attempting to create

design awareness for, and introduction of design culture to the Jordanian manufacturing

sector.

In short, Jordan must import what it cannot find locally, add value through better

design, better marketing, and improved efficiency, and export the finished products

and services to customers who value them.

It is now time for Jordan to start innovating, or face continuing economic difficulties

and reliance on foreign aid.

3.1.4 Knowledge Economy

Nowadays much is being said about the knowledge economy, simply meaning that

businesses must look for more sophisticated, high-grade knowledge to be inserted into

the production and service sectors.

The emphasis is often on the creation of new, highly competitive enterprises and,

however important that may be, it is vital to improve the existing production and

service base. The textile industry in the EU, for example, has only been able to survive

in sectors where “high tech” has been introduced (Kevlar shielded material, artificial

grass for sports etc) or where the industry has been able to introduce rapid change

capability and extremely short and efficient delivery times.

3.2 INNOVATION

There are many definitions of innovation but in the context of wealth creation

innovation has to be defined in terms of economic activity. Simply “having an idea” is

not innovation. The innovation occurs when the idea is turned into practical reality, or

in this context, commercial reality. And the idea does not have to be technology based,

nor a radical breakthrough. Innovation concerns everything involved with strengthening

the competitive edge of the enterprise, be it new product development, higher quality,

adapting existing products to new markets, better packaging, better promotion,

financial engineering, etc. Such innovation can generate significant wealth if applied

properly.



Wealth creation is what economic development is (or should be) about. More profitable

businesses means more tax paying jobs, increased movement of money in the economy,

and higher GDP. Good innovative ideas will also be global in nature so increased exports

and/or reduced imports will result.

However, not all businesses are innovative. Many concentrate on commodity products

that are simply copies of those already in the market – so-called “me too” products. All

that differentiates commodities is price. If you can be cheaper (assuming the quality is

the same) you will be able to sell more than your competitors. For example, today’s

garment industry in Jordan is a purely commodity industry.

Commercial viability means making a profit. Selling for more than the cost of

production, overheads and marketing. But how do you ensure that people will pay

enough for your product or service to be profitable?

The key to commercial viability is innovation. Innovation in technical features, quality

(and cost) of production, or marketing. Developing a product or service, or delivering

this product or service, in a new way that adds real or perceived value to the customer.

Without a way of differentiating from competitors businesses will not find it easy to

succeed and grow, and the subsequent benefits of jobs, tax revenue and GDP growth

will not follow.

Therefore, the key to a good innovation policy, which is the key to wealth creation, is

to create an environment that enables entrepreneurs to exploit innovative ideas with

minimal bureaucracy and maximum efficiency.

3.2.1 Innovation in Context

However, innovation does not and cannot exist in a vacuum. Innovation touches all

aspects of society and the economy.

Figure 1: Innovation in Context



In trying to understand how to provide an environment conducive to innovation, each of

these factors must be considered. Some factors, governments can influence, others

influence governments. None should be ignored.

At a more practical level, innovation is also quite nebulous – unformulated and

imprecise – a cloud of activity with no fixed boundaries but encompassing a large

number of actions.

Figure 2: The Innovation Cloud

It is simple to say innovation is concerned with turning ideas into wealth, but how is

such a skill learned, stimulated and supported?

This document considers the following aspects of innovation and provides practical

guidance on what can be done to improved the situation:

Research and Development

Education and Culture

Laws and Regulation

Financing

Management

Business Support



4 Research and DevelopmentBasic research is what I am doing when I don't know what I am doing.

Wernher von Braun (1912 - 1977)

Research is the process of going up alleys to see if they are blind.

Marston Bates

4.1 OVERVIEW

Research and Development (R&D) in Jordan is still at its early stages. At universities the

research is still mostly basic research. Any applied research which does take place is

generally “supply-driven” – based on what the researcher wants to research - rather

than “demand-driven” - based on solving industrial or commercial problems.

Equally detrimental, the business/industrial community is not enthusiastic about

engaging with academia to solve its problems, nor to support R&D through setting aside

a percentage of profits as dictated by Article 188 of the Companies Law. The companies

believe the money can be better spent by internal R&D within the business or industry.

University professors are unwilling to take part in R&D work that does not reward them

financially. Furthermore, most professors are “burdened” by teaching responsibilities

which reduces their ability to work on R&D. It should be noted that research-only posts,

that exist in many universities in developed countries, are not available in any

Jordanian university.

Moreover, the absence of real graduate work undertaken by graduate students due to

lack of funding makes this potential contribution to innovative ideas unavailable to the

economy.

4.2 INNOVATION VERSUS R&D

It is important to make a distinction between innovation and research and development.

R&D is generally a scientific process undertaken by universities and other academic or

research organisations with the goal of creating new knowledge. What happens to that

knowledge once created is not really their concern.



Consider the table below and the differences between R&D and innovation.

Research & Development Innovation

Purpose Generation of new ideas Conversion of ideas intobusiness and wealth

People Academics

Scientists

Researchers

Entrepreneurs

Business people

Place Universities

Research establishments

The marketplace

Companies

Price Cost to the economy Income for the economy

Précis(summary)

“the science of turningmoney into ideas”

“the art of turning ideasinto wealth”

Table 2: Comparison of R&D and Innovation

Both R&D and innovation are important to an economy but they have different

objectives. They are carried out by different types of people; R&D by academics,

innovation by entrepreneurs. Academics think in terms of finding out how or why

something works. Entrepreneurs think in terms of how this knowledge can be applied to

create wealth. R&D takes place within research establishments with defined boundaries.

Innovation takes place in the market, which is much more fuzzy and less well defined.

In summary therefore, R&D could be thought of as the “science of turning money into

ideas”. Whereas innovation is the “art of turning ideas into wealth”.

4.3 INNOVATION CONTINUUM

In reality, the world is not so black and white. There is a continuum from pure research

to the market place that involves feedback.

Figure 3: The Innovation Continuum



Money generally funds the creation of new ideas based on pure and applied research.

Entrepreneurs take these ideas and exploit them commercially to generate wealth.

Customer comments can be fed-back to the researchers to help guide further work and

generate new ideas. This is the “perfect world” model of how R&D should benefit

business and society as a whole. However, in reality it is not so simple.

4.4 R&D LINKS TO BUSINESS & INDUSTRY

One of the key challenges to converting innovative ideas into wealth is transferring

those ideas from academic institutions to the private sector. In general there is little or

no communication between academic research and commercial production.

Figure 4: The Separate Nature of R&D and Business

Researchers work in the academic world, speaking a totally different language to the

business people who inhabit the commercial world. But for successful innovation to

occur from R&D, there must be communication and connection.

The pharmaceutical industry provides a good example of how to get this connection

right. Globally, pharmaceutical companies probably conduct the largest amount of

private sector R&D. They employ huge numbers of scientists and researchers in order to

develop the next wonder-drug. But these researchers retain a foot in the academic

camp to ensure they can exploit the latest research developments coming from

universities.

Figure 5: Commercial Research within the Pharmaceutical Industry

These scientists conduct commercial research; research geared towards delivering

commercial (ie profitable) results.

This model is not suitable for every business, especially small businesses, so how else

can Jordanian R&D organisation get closer to business and industry?



4.5 RECOMMENDATIONS

4.5.1 Awareness Raising

It is extremely hard to force academics and business people together. It has to be a

process of step by step trust building.

One approach adopted by the Czech government, which would work well in Jordan, is

the following:

Map all the research being undertaken in every research institute at a very general

level; enough information to indicate the subject but without compromising

academic confidentiality.

Provide these findings to the private sector through presentations, newsletters,

sectoral meetings etc.

Publish the details on the internet and make them freely available to anyone.

Encourage one-on-one discussions & exclusive deals by following up with private

sector interest and brokering meetings between business and academia.

Ensure that academics (and their institutions) can share in the financial rewards of

their work (see below).

Begin to build trust and understanding between the two worlds.

The one-on-one meetings are crucial to the success of this activity. Holding general

meetings of academics and business within a particular sector will have poor results.

Academics will not present the details of their research in front of other academics.

Business owners will not talk of their needs in front of their competitors. Only by

building trust between individuals will the process of technology transfer take place.

4.5.2 University Regulations

Universities and other research establishments must become more business friendly to

encourage the transfer of intellectual property (IP) developed within these institutions

to the private sector and the marketplace. The regulations governing how academic

(and other) staff can engage with the private sector must be reconsidered:

Allow academic (and other) staff to be company directors and business owners

Define how any intellectual property developed within the university can be

commercially exploited by licensing to an outside company or through a spin-out.

Typically in Europe licensing deals are split three ways:

1/3 for Academic who developed the IP;

1/3 for the Department where the academic works;



1/3 for the University central administration.

Spin-out will typically involve the University holding 50% of the start-up equity and

the founders (including the academics) the other 50%.

Change the promotion system to encourage academics to work with private sector,

either within their own businesses or established companies.

Change the focus from publication to technology transfer or IP exploitation.

4.5.3 Technology Transfer

Universities and other research organisations need Technology Transfer Units (TTU).

The purpose of these TTUs is to identify potentially valuable research taking place

within the institute and provide a way for its commercial exploitation (either via

established firms or start-ups). For example, Imperial College London’s TTU is

established as a limited company (Imperial College Innovations Ltd -

www.imperialinnovations.co.uk) and has the following objectives:

Evaluate inventions for their commercial potential.

Develop the IP strategy and manages the College’s patent portfolio.

Determine whether to commercialise technology by spin-out or licence.

Manage spin-out company formation.

Manage licence marketing and negotiation.

The TTU should be responsible for the IPR of the institute.

A national coordinating body (perhaps through the Higher Council for Science and

Technology) should connect the TTUs of each institute to ensure best practice is

being adopted and utilised.

4.5.4 Company Contributions

The Innovation Workshop3 conducted by EJADA with senior figures from the

Jordanian public and private sectors recommends that the current Article 188 of

the Companies Law needs to be revised thus:

Have a tax incentive by allowing the 1% deductions to be from gross profit

rather than net profit

Make the Law applicable to all kind of companies not only public shareholding

companies

3 The Workshop was conducted with two groups; policy makers and beneficiaries. The

discussion addressed many of the issues presented in this policy.

http://www.imperialinnovations.co.uk



The mechanism to accept the 1% deductions should be clear in the sense as to

define what is R&D and what is not (remove the “training” option)

Encourage pooling of resources and group R&D projects for the benefits of

industry/business clusters

Give a role to the business associations in controlling and governing the

implementation of this Article.

Proceeds of this Fund should be overseen by a mix of public and private sector

entities with a business, industrial or commercial bias.

Although the money will be invested in the R&D institutions of Jordan, it must be

used to the general benefit of the businesses that contributed and not for pure

research.


5 Education and CultureEducation's purpose is to replace an empty mind with an open one.

Malcolm Forbes (1919 - 1990), in Forbes Magazine

I have never let my schooling interfere with my education.

Mark Twain (1835 - 1910)

5.1 OVERVIEW

When coming to power in 1997, Tony Blair (the British Prime Minister) famously said

that his three priorities for government were “education, education, education”.

Despite not having achieved all he wished to, the focus was indeed correct.

The education system influences how every student thinks. About creativity, work,

business, risk taking and making money. Students can be encouraged or dissuaded by

the methods of teaching, the attitudes of the teachers and the pressure applied by their

fellow classmates. Given this power, it is vital for the future of Jordan that the

education system is leading students in the right direction.

5.2 EDUCATION SYSTEMS

Two questions that determine education systems are:

What are people taught?

How are people tested?

5.2.1 Teaching

One system focuses on teaching facts that must be memorised and regurgitated during

an examination process. Unfortunately, this does not teach the student to use his or her

mind to think how to solve a problem, especially a problem that no one has solved

before and for which there are no existing facts.

Another system focuses on teaching theories and principles, from which students can

derive the solution to many problems. Such a system may be more relevant to

mathematics, science and engineering than to history, literature and the arts, although

it can be applied to these subjects too. However, teaching students to have an open,

enquiring mind, and equipping them with the tools to solve original problems will lead

to increased levels of innovation.



Figure 6: Jordanian Education Approach

5.2.2 Testing

Using project based testing will also provide a much better indication of the application

of the learning than a simple focus in exams. If students can apply their theories and

principles to real-world problems there is more chance of the leaning being retained,

and more chance of it being applied later in life to develop an innovative product or

service.

According to the Innovation Workshop, in addition to the nature of the learning process,

public schools often lack the minimum standard of infrastructure, teachers, resources,

ICT and curricula to provide an environment conducive to nourishing innovation.

5.3 VOCATIONAL TRAINING

The Innovation Workshop produced the following comments on the vocational training

situation in Jordan:

Vocational training does not match the needs of industry today, let alone the

industry of tomorrow.

There is no linkage between the education system and the training services; there

is no continuity from formal education to vocational training.

Training is usually supply driven rather than demand driven; being maintenance

oriented rather than manufacturing oriented. This situation is mainly due to the

lack of sponsorship by industry of the training programmes which means industry

needs are not expressed to the training organisations.

5.4 CULTURAL IMPACT

The impact of culture on innovation and entrepreneurship is significant. Attitudes to

work, money making, running one’s own business are all linked strongly to culture,

parental influence, willingness to take risk, pressure from friends etc.



With 40% of the working population employed by the government in one way or another,

Jordanian attitudes to work strongly veer away from risk taking. The natural career

path for a student is to get a well paying job or professional career (as a doctor, lawyer

or engineer) similar to one’s father, uncle, family member or neighbour. In many ways,

setting up one’s own business is seen as a last resort for those unable to get a job – not

a very positive approach.

The following figure, based not on empirical data, but the author’s personal experience,

indicates the employment preferences of people from different countries and cultures.

Figure 7: Employment Preference by Country

Obviously there are many cases outside the general trend but broadly Jordanians are

much more focussed on getting a government job (with all its ensuing security and

pension rights) rather than working for themselves.

5.5 SOCIOECONOMIC IMPACT

Another interesting factor is the impact of an individuals socio-economic position in

their ability and/or willingness to take risk and become an entrepreneur.

As the figure on the following page shows, those at the upper or lower end of the scale

will tend to innovate more than those in the middle. The upper end taking risk with

their capital, the lower end simply having no choice if they want to eat that night. The

middle is squeezed in such a way that they cannot afford to take the risk even if they

want to, but the desperate need is not there either.



Figure 8: Risk Taking and Innovative Ability of Different Groups

For example, many successful entrepreneurs started with significant amounts of family

money; Aramex (Jordan), EasyJet (UK), Microsoft (US). These people could afford to

take a risk as losing the initial investment would not be disastrous. These people tend

to look for long-term growth and long-term returns on the investment.

At the other end, people living from day-to-day have a strong incentive to be

entrepreneurial in order to put food on the table. The saying “necessity is the mother

of invention” is very apt for this group. Most innovation tends to be opportunistic, but it

is innovation all the same. For example, following the bombings in Amman last year,

within days, at every set of traffic lights, people were selling Jordanian flags. They saw

an opportunity, organised the production and distribution and created business.

However, it is the middle group that needs the most help in turning their ideas into

business. Middle class people generally have “enough” to live comfortably. There is no

necessity to innovate to create new wealth for themselves. However, they live month-

to-month, spending all their salary on housing, schooling, food etc. Nothing is left for

saving or investing in a new business. Also, many people have secure jobs with good

pension possibilities which they are fearful of losing. They cannot afford to fail. But,

many of these people have some of the best, most practical innovative ideas due to

their education levels and experience in the market. The economy is losing many

opportunities by not providing the means for these people to take their ideas forward.

5.6 RECOMMENDATIONS

5.6.1 Education Reform

Reassess the education reform process within the schools education system to cover

the following issues:



Change the focus from teacher/professor to student; put the students at the

centre of the process with all other elements being inputs to the process.

Dynamically revise the curriculum to enable students to think, rather than

simply being spoon fed the facts, and to reflect technological and scientific

developments.

Upgrade the skills of the teachers to deliver such a curriculum.

Develop “soft skills” in students as well as the hard fact and theories;

encourage team working at the early levels as this skill is lacking but necessary.

Look at how other countries, with significantly more innovative output and

creativity, provide education to their children and students.

Adopt what works for Jordan, adapt that which can be used in a different form, and

invent what is required specifically in the Jordanian context.

5.6.2 University Reform

In addition to retaining the quality of medical, engineers and scientific university

education, the system must begin to orient itself towards the needs of the market.

Higher education and industry are alienated. The former must begin to shape its

degrees towards the needs of the latter. And the latter must become active in

defining its requirements and shaping such degree programmes.

In the final year of bachelors degrees every student should take a course in basic

business skills; business planning, marketing, negotiating, business ethics, legal

issues etc.

Awareness programmes for senior university and private sector management should

be run to present the needs of the changing economy, the requirement to focus in

supporting innovation, entrepreneurship and the links between the academic and

business communities.

5.6.3 Young Enterprise

One approach that has been used the UK for the last 40 years is Young Enterprise

(www.young-enterprise.org.uk). Its vision is “that all young people will have the

opportunity to gain personal experience of how business works, understand the role it

plays in providing employment and creating prosperity, and be inspired to improve their

own prospects, and the competitiveness of the UK.”

It runs from elementary school through to undergraduate level, but its core programme

focuses on 12-19 year olds. Activities include seminars on the workings of business

through to a year-long “Company Programme” where a team creates a business, elects

a board, raises capital and trades over one academic year. At the end of the period

http://www.young-enterprise.org.uk



they liquidate the business and present a report and the accounts. All participants are

invited to sit the Young Enterprise Qualification which formally recognises their abilities.

Young Enterprise is affiliated with Junior Achievement, a programme already being run

in Jordan with INJAZ. However, the Company Programme of the Young Enterprise would

be a very beneficial addition to its portfolio.

5.6.4 Work Placements / Internships

Work placements and/or internships provide students with valuable hands-on

experience of the working environment. Such schemes should be strongly encouraged

within the high school and university systems.

Get school pupils and students to spend some time within the private sector on

placements within companies.

High school students can spend two weeks following their exams within an industry

they are considering working within.

University students can link their final year projects to a specific need within the

private sector and learn the practical implications of their theoretical learning first

hand.

5.6.5 Vocational Training

Vocational training is a vital ingredient in ensuring that Jordan’s workforce is used as

productively as possible. In addition to the work being conducted by EJEP4 and Siyaha5

to align training provision with the needs of specific sectors, training programmes must

be defined with the private sector.

Industry, higher education and the commercial training companies must work

together to review what is provided, how it fits the market’s needs and what can

be done to improve the situation.

Moving from a low-cost manufacturing oriented economy towards a knowledge

driven high-value economy will require significant (re)training of the workforce.

Training must match the needs of the global market, not the capabilities of the

current suppliers. Retraining of the trainers may also be required.

4 The Ministry of Labour worked with EJEP to define training needs of many industrial

sectors and to provide training courses that meet those needs

5 Siyaha is a US funded programme involved with training in the tourism sector


6 Laws and RegulationEven when laws have been written down, they ought not always to remain unaltered.

Aristotle (384 BC - 322 BC)

The law is not so much carved in stone as it is written in water, flowing in and outwith the tide.

Jeff Melvoin, 1992

6.1 OVERVIEW

Laws and regulations have the power to encourage or inhibit innovation and

entrepreneurial behaviour. For example, high levels of bureaucracy in establishing a

new company will inhibit innovative activity, whereas new regulation covering

environmental concerns could encourage innovation.

6.2 TIME TO TRADE

A big issue in Jordan is the time taken to start trading once you have decided to start a

business. Compared to, say, the United Kingdom, Jordan has a long way to go to ease

this burden.

Figure 9: Time to Trade - UK and Jordan

There are several aspects to the process in Jordan, including:

applying to establish a company a the Ministry of Industry and Trade (MIT);

depositing the required capital;



gaining the requisite permits from other Ministries (depending on which sector the

business will operate) – often the largest amount of time;

gaining approval from the appropriate professional and business associations.

Such bureaucracy can seriously deter many people wishing to exploit their innovative

ideas.

6.3 CONSUMER PROTECTION

One argument used for the necessity for gaining all the approvals is protecting the

consumer from companies not qualified to provide the services they sell. For example:

If an entrepreneur wishes to start a hospital, unless he is a qualified doctor he

cannot own the business.

If an engineer wishes to set up a consultancy business, he must firstly be a member

of the Jordan Engineers Association, and secondly be approved by the JEA to be a

consultant.

Consumer protection is important, but it should be exercised through appropriate

legislation, not by limiting the establishment of new businesses. The key requirement is

for ownership of a business to be separated from operation of that business.

For example:

Any entrepreneur should be able to own a hospital business, provided he employs a

qualified doctor as Chief Medical Officer, to oversee all medical aspects of the

work.

Any engineer should be able to trade as a consultant (without having to be a

member of any association) but his university degree certificate and Trades

Description legislation should provide consumers with confidence that he is able to

deliver what he claims he is able to deliver.

6.4 TAXATION

Taxation in Jordan is currently not a barrier to innovation. However, the legislation

currently proposed could put up barriers.

When designing any tax laws, officials (of any government) should consider the impact

on the business community. A overly heavy tax burden on companies will limit their

ability to employ people, limit their ability to grow, and, over the long term reduce the

tax raising potential of the country. There is a potential for a vicious circle where

increased tax rates cause less business and less employment, which in turn reduces the

amount of tax paid, which causes the tax rates to be increased for the government to

receive the same revenues.



Supporting innovative new business (through appropriate use of the tax system) will in

the long-term increase the flow of tax. A virtuous circle can be achieved where more

business equals more employment equals higher tax revenues and potentially lower tax

rates.

6.5 INTELLECTUAL PROPERTY RIGHTS (IPR)

As a member of the World Intellectual Property Organisation (WIPO), Jordan has a

developed range of IPR legislation managed through the Industrial Property Directorate

within the Ministry of Industry and Trade. Laws enacted over the last 7 years cover

trademarks, patents, industrial designs, integrated circuit designs, and unfair

competition and trade secrets. The MIT website provides much documentation and

guidelines for businesses wishing to protect their IP.

The laws exist and are strong enough to provide the right kind of protection businesses

need. Unfortunately however, the policing and enforcement of the laws has not kept up

with the situation on the ground. Mechanisms for translating the IPR laws into practice

seem to be missing. Lawyers and the judiciary require improved training in how to bring

cases to trial and prosecute those who are flouting the law.

6.6 RECOMMENDATIONS

6.6.1 Reform Negative Regulation

Reduce the burden on new businesses from the time they decide to start and the

time they can legally begin to trade.

Create a real one-stop-shop for business establishment, not just for the relatively

simple task of company registration:

Provide a service that is designed by the private sector for the private sector;

incentivise staff to deliver results quickly and efficiently; eliminate the “civil

service” mentality that exists.

Provide a coordination of the needs of all departments that are required to give

approval to new companies.

Remove the requirement for business owners to attend in person; allow their

professional representatives (lawyers or accountants) to conduct the work.

Reconsider the mandatory requirement for all business to belong to either a

Chamber of Commerce or Chamber of Industry.

Reconsider the mandatory requirement for professionals to belong to Professional

Associations.



Consider the establishment of an SME Unit within the Ministry of Industry and Trade

to focus on the needs of new and small businesses. Reduce the perceived (or real)

bias given to large enterprises by JIB, MIT etc.

Ensure new tax laws do not bring additional burdens onto business.

6.6.2 Introduce Neutral Regulation

Develop consumer protection legislation that takes on the responsibility to ensure

that customers are provided with the goods and services they pay for, with the

quality and after sales warranties they expect.

Apply strong penalties for business people found to be breaking business law, but

lighten the regulation for the majority of honest citizens who are simply making a

living.

6.6.3 Develop Positive Regulation

Consider regulation that encourages innovation within the energy saving,

alternative energy production and water saving. For example:

Consider regulation within the construction industry that, over time, enforces

every new building to include a certain level of energy and water saving devices.

Over time the percentage of these devices that must be designed and

manufactured in Jordan can gradually increase. Note: Such activity must be

conducted in the context of WTO rules, for example, those protecting infant

industries.

This regulation will provide opportunities from the private sector to innovate

ways of delivering these solutions.

Once created for the local market, these devices will have application in many

other parts of the world.

Such regulation delivers solutions to local needs and creates foreign earnings from

exports.

There are many other examples of how regulation can be used positively both to

deliver useful results and to stimulate innovation and wealth creation.


7 FinancingLack of money is no obstacle. Lack of an idea is an obstacle.

Ken Hakuta

Finance is the art of passing money from hand to hand until it finally disappears.

Robert W. Sarnoff

7.1 OVERVIEW

All businesses need financing in their early days; many businesses require continuous

financing to fund their growth strategies. Different types of financing are required at

different stages of a business.

Type Amount Purpose

Friends, Family and Fools $0-$5k start-up seed capital

Grants and Soft Loans $5k-$50k start-up and early growth

Business Angel Investment $50k-$1m early growth (possibly many rounds)

Venture Capital $1m+ continued growth (possibly many rounds)

Initial Public Offering $10m+ growth, acquisition, global expansion etc

Table 3: Types of Business Financing

Not all businesses require all types of financing but their availability is crucial to

providing and supportive environment to innovative businesses.

7.2 AVAILABILITY OF FUNDING IN JORDAN

In Jordan, the situation is somewhat more difficult than in the US or Europe. As the

figure on the following page indicates, funding is available for the very early stages; not

a huge amount but it is there.



Figure 10: Availability of Financing

7.2.1 Seed Funding

For example, the Jordan Innovation Centre Network (JICnetwork) has a seed capital

scheme that provides up to 15,000JD for selected incubatee projects. Investment is

made based on a clearly defined need that will propel the business to the next stage of

development. Seed money has to be used wisely to ensure the best “bang for the buck”.

7.2.2 Business Angels

However, the problem arises for business where the next step of growth requires

investment in the $50k-$1m range. Here, in Jordan, these is a serious lack of options.

In other countries “business angels” – wealthy individuals who have often made their

money through entrepreneurial ventures – provide this level of funding. Access to

business angels is not easy, but in many areas business angel networks are established.

7.2.3 Venture Capital

Beyond the seed and angel investment rounds, venture capital plays its part. This may

not be the right route for every one as VCs will often make extremely tough deals for

the founders of the business. There is very little VC in Jordan currently, although

discussions are on-going with a number of groups mainly considering regional

investment. One group, Foursan, is active but works with large investments.

7.3 RECOMMENDATIONS

7.3.1 Jordan Innovation Centres

The JICnetwork must be continued to provide not only the seed funding, but the

business counselling to the incubatee projects. Obviously the larger the fund, the

more projects that can be supported.



Rigorous evaluation criteria should continue to be applied to ensure the investment

is delivering the right results.

Furthermore, as the fund’s activities grow, consideration should be given to

repayment models to allow a move towards sustainability.

7.3.2 Taxation

New tax regulations must not bring in capital gains tax on start-up investment. In

fact, legislation to encourage start-up investment should be considered.

For example, provide double tax relief on investments in new businesses if the

investors remains in for 4 years or more.

7.3.3 Jordan Business Angels Network (JoBAN)

The establishment of a Jordan Business Angel Network (JoBAN) should be

encouraged.

Such a network requires a group of individuals to commit to invest a proportion of

their wealth in new ventures. It needs coordinating with groups, such as the

JICnetwork, to provide deal flow (a flow of ideas that could be potential

investments).

A number of models for Angel Networks exist, but two of the most common are:

Members contribute to a common fund which then invests jointly with members

receive shares in the invested companies in proportion to their holding in the

fund.

Members individually invest in companies based on their own interest,

experience and belief on the companies’ potential. Often in these models,

investors will also take a seat on the Board and become more active in

supporting the company.

There are many examples outside Jordan who can advise on the best way of

establishing JoBAN.


8 ManagementIn the modern world of business, it is useless to be a creative original thinker unlessyou can also sell what you create. Management cannot be expected to recognize agood idea unless it is presented to them by a good salesman.

David M. Ogilvy

It's all very well in practice, but it will never work in theory.

French management saying

8.1 OVERVIEW

Many Jordanian business are extremely vertically integrated – handling everything from

design, manufacture, sales, marketing and administration within one organisation.

However, to address the global market, and to most efficiently use the resources that

exist in that market, companies should consider whether the vertically integrate

approach is still appropriate.

Figure 11: A Vertically Integrated Business

8.2 CORE AND PERIPHERY

Most companies have a set of core activities which define what line of business the

company is in. The core activities are where the company adds most of its value and

where it can uniquely differentiate itself from the competition. Other activities around

the core (the peripheral activities) may add value or may actually cost the company

money.

For example, small companies will not usually employ full time accountants. It is more

cost effective to outsource that activity to another firm. However, the larger the



company becomes, the more tempting it is to bring such activities inside. The theory

being that it is cheaper to pay a salary than to pay fees to a third party.

This may be true, but the long-term effect may be less positive. For example, by

bringing the marketing communications activities inside a company may reduce

effectiveness due to complacency. If an external firm knows you can choose between

many suppliers of the service, they will work harder for you in order to keep your

business.

This model can be applied to many other aspects of the business. Is the design

department needed? Does the manufacturing have to be done in house? Can sales be

outsourced to partners? If a company really focuses on its core activities, and

outsources the periphery, it can be more effective, more flexible and more adaptive to

market changes than if it tries to do everything.

Figure 12: Core and Periphery

Figure 12 shows one extreme where the core activities of the company are the design of

products and the ownership of the brand. Manufacture and sales are handled by third

party contractors and partners. The PC industry is a prime example of this model in

action. For example, Apple Computer designs its PCs and laptops, owns a very powerful

brand, but outsources manufacture to the Far East.

8.2.1 Linkages

As Jordanian businesses begin to focus on their core activity it will become more

important to backward establish linkages to ensure suitable outsourcing partners can be

found. Continued support for the National Linkages Programme is therefore increasingly

important.



8.3 W(H)ITHER MANUFACTURING?

The model in the figure above may not be appropriate for many manufacturing

companies in Jordan, but they should look closely to their core competencies. The cost

pressures from the East could have disastrous impact on Jordanian manufacturers.

However, by realising this and understanding what is core and what is peripheral,

businesses can remain competitive.

For example, if the company manufactures a commodity product but has a good brand

name in the market, perhaps it is time to consider outsourcing the manufacture and

focus on the design, branding and sales. If the company is adding value by

manufacturing a niche product for a specific market where the customers are prepared

to pay the premium, focus should be in making that manufacturing process as efficient

as possible.

8.4 VALUE ADD

Each company is different and requires a specific evaluation. But, only by becoming

leaner and more efficient, focusing on the areas where value is truly added into the

process, will Jordanian business be able to compete in the global market.

Jordanian businesses must look at the value chain in their industry, identify where the

most value is being created and see where they currently fit. If possible, they should

endeavour to move up the value chain and position themselves in the higher value areas.

To succeed, they should move away from the low-value, high-volume commodities and

identify niche opportunities with specialised requirements where Jordanian business can

deliver high quality at a lower cost than EU/US competitors.


9 Business SupportThe nine most terrifying words in the English language are, 'I'm from the governmentand I'm here to help.'

Ronald Reagan (1911 - 2004)

9.1 OVERVIEW

Jordan is not lacking in business support organisations. The figure below shows an

incomplete list of entities that support all sizes of business with services ranging from

the very specific to the general.

Figure 13: Business Support Map

9.1.1 Support is available for:

Financing

Business counselling

Marketing analysis

Export promotion

Business upgrading

Start-ups and entrepreneurs



General advice

Networking

However, there is a general lack of coordination between organisations.

9.2 JORDAN INNOVATION CENTRES

In terms of supporting innovation, one of the most effective tools is business incubation

within an Innovation Centre (See Annex 1). EJADA has supported the establishment of a

network of Jordan Innovation Centres (JICs), hosted by:

Royal Scientific Society

University of Jordan School of Agriculture

Philadelphia University

Jordan Industrial Estates Corporation

Higher Council for Science and Technology / iPARK

Each JIC provides its clients with the same range and quality of business support

services and seed capital funding, in addition to specialised services delivered by the

host organisation.

9.2.1 JICnetwork

To support the JICs, EJADA supported the establishment of the JICnetwork.

Its vision is “to participate in the real creation of national wealth for Jordan by

stimulating & leading the innovation & incubation initiatives”.

Its mission is “to create, operate & expand a network of Jordan Innovation Centres

according to the international best practice”.

Its objectives are:

to systemize & widen an independent JICnetwork functional umbrella to service &

to operate the network of JICs.

to ensure consistency in the quality of delivery of business services to all JIC clients.

to expand the number of JICs to a total of eight by the end of 2010.

to enlarge the first two JICs (at the RSS and University of Jordan) by the end of

2006.

to create a real market demand for incubators that is consistent with this

expansion in the JICnetwork.



to create & maintain an active regional & international involvement & presence in

innovation & incubation.

The business model operated by the JICnetwork relies on shared responsibilities

between the host of the JIC and the JICnetwork itself.

9.2.2 Long-term Commitment and Sustainability

Supporting business incubation and innovation through the JICs is a long-term process. It

takes time for businesses to be built, customers to be acquired, and technologies to be

commercialised.

However, in the long-term, European experience has shown that developing new

enterprises via innovation centres is extremely cost effective at producing sustainable

high quality jobs.

Figure 14: Positive Feedback

Initial Government support for incubation delivers two types of positive feedback:

Firstly, wealth generation via increased taxes from companies and employees.

Secondly, attitude change regarding entrepreneurial activities through increase

exposure to start-ups, risk taking and success.

Such feedback can start to create a virtuous circle of activity with the more success of

start-ups causing more people to want to get involved.

Sustainability must be considered at the macro level. Each JIC will need continual

funding to ensure the commercialisation of new good ideas. Increased taxation from

these successfully incubated business provides the funding for the next generation of

ideas. Any organisation wishing to Host a JIC must be clear that taking on an incubator

is not a way to make money. It is a way to support the country in developing new

industries, new employment and better positioning Jordan in the global market.



9.2.3 Tangible Benefits

Within Europe and the US, using such innovation centres as key economic development

tools has proved very successful, with the “cost-per-job” (at around €4200 in Europe)

being one of the lowest and the quality and sustainability of such jobs being one of the

highest.

9.3 BUSINESS AND PROFESSIONAL ORGANISATIONS

There is a perception amongst many that Jordanian business and professional

organisations add little value to their members. Mandatory memberships of such

organisations is therefore unproductive. However, to start a business one often must be

an existing member of a professional organisation and become a member of a business

organisation.

This type of compulsory cost with little return can be seen as a barrier to many

entrepreneurs.

Perhaps a move towards more voluntary membership (as exemplified by, for example,

JoStone and JGate) would create a sense of competition between organisations which

would lead to improved services that members actually wanted and therefore valued.

9.4 RECOMMENDATIONS

9.4.1 Mapping

A complete mapping exercise of the existing business support agencies should be

undertaken and the gaps fully identified. Overlapping programmes should consider

working together to deliver the services. Donors should be encouraged to develop

programmes that fill the gaps.

9.4.2 JICnetwork

It is imperative to continue the support for the existing JICs and to implement the 5

year expansion plan already developed.

By 2010, the JICnetwork should be increased to 8 JICs, each supporting an average of 10

projects. Significant public awareness is required to explain the value of the JICs and

how individual members of the public can apply to turn their innovative idea into

business reality.

A key area of support is the training of new JIC managers. Links with international

organisations, such as EBN, to provide on-going training is extremely important if the

success of the incubated businesses is to be achieved.


10 Implementation

10.1 CO-ORDINATED ACTIVITIES

I believe there is a unique opportunity right now for Jordan to align the key activities

required for wealth creation to ensure the country has the best possible chance of

moving up the value chain towards a better skilled population, increased added value

business, better exploitation of knowledge and technology.

Figure 15: Integrated Approach to Wealth Creation

As the diagram above shows, there are five stages to the process:

The starting point of any integrated strategy must be to firstly identify what your

customers want to buy. Jordan must find its niches in the global marketplace.

Jordan must then focus on the subset of global needs that it as a country can

deliver profitably.

Second, we must align the R&D capacity, Start-up activities, Business Upgrading

and Export Promotion with the target areas. All actions within these activities must

be conducted with the target sectors in mind.

Thirdly, there must be communication and integration between these entities to

ensure a flow of ideas and limit duplication of effort.

Forth, there is likely to be a requirement to invest in matching the skills of the

labour force with the needs of the market. Training and retraining must be aligned

to the needs of the businesses.

Finally, each of these activities requires funding to enable investment in the

delivery of these opportunities.



Implementation of the recommendations in this policy document will require significant

coordination between a large number of diverse organisations:

Government

Ministry of Industry and Trade

Ministry of Higher Education

Ministry of Planning and International Cooperation

Ministry of Finance

Semi-government

JEDCO

JUMP

JIEC

JIB

Donors

USAID

EC Delegation

Japanese

NGOs

Research establishments

Private sector

An umbrella organisation should be given the authority and responsibility for this

coordination. Each party should be encouraged to take part in the process.

By providing such an integrated response to the global pressures, Jordan will be much

better equipped to deliver real economic growth and reduce poverty and the reliance

on donors.

Whilst the author acknowledges the difficulty of this implementation, it is clear that

Jordan is at a crucial junction in its development and by taking bold steps now to

change the business environment it is possible to create the best place in the region for

entrepreneurial innovative businesses to be established and developed.



Annex 1: Development of Jordan InnovationCentres

1.1 BACKGROUND

During the past two years, EJADA has supported the development of a network of

Jordan Innovation Centres.

1.2 INITIAL TWO JICS

Following on from a report entitled “Bateman”, it was agreed to help set up two initial

incubators; at the Royal Scientific Society supporting engineering and industrial projects,

and at the University of Jordan supporting agro-business projects.

1.2.1 JIC at RSS (Engineering Incubator)

The JIC at RSS has 150 m² of high quality refurbished space providing six incubation

units, management office, meeting room and common area.

The JIC at Royal Scientific Society was launched on 16 November 2005.

There are currently 5 projects running.

1.2.2 JIC / AIBI (Agro-Industry Incubator)

The JIC / AIBI also has 150 m² of high quality refurbished space providing six

incubation units, management office and meeting room.

In addition to the University, refurbishment was funded by the Higher Council for

Science and Technology, and the Ministry of Planning.

The JIC / AIBI was launched on 24 August 2005.

There are currently 4 projects running.

1.3 ADDITIONAL JICS WITHIN THE JICNETWORK

As one of the key objectives of the original two incubator projects was to create a

“template” for replicating incubators across the country, it was agreed to identify

additional host organisations and begin negotiations to establish new JICs.

1.3.1 Philadelphia University

Philadelphia University contacted EJADA requesting support in establishing an

incubator.

It was agreed to create the incubator as a JIC and an MOU was signed on

December 18th 2005.



The JIC at Philadelphia University will initially be general purpose until it is

clear whether any logical “clusters” of activity form.

The location will begin within temporary space in the Engineering Department.

Plans for a purpose-built incubator building are being developed.

1.3.2 Jordan Industrial Estates Corporation

The Jordan Industrial Estates Corporation contacted EJADA requesting help in

setting up an incubator. EJADA agreed to help and let a local contract to help

define exactly how the incubator should be established.

It was agreed to create the incubator as a JIC on the Al-Hassan Industrial Estate

in near Irbid in North Jordan and an MOU was signed on February 8th 2006.

650 m² was assigned to the JIC and work on refurbished the space to EJADA’s

specification was conducted.

The JIC at Al-Hassan Industrial Estate will also be general purpose in nature, but

should have strong links to the existing sectors which are on the Estate.

1.3.3 iPARK

Finally, discussions took place between the JICnetwork and the ICT incubator

(known as iPARK, a project of the Higher Council for Science and Technology

[HCST]) at the RSS.

It was agreed that iPARK should join the JICnetwork and to jointly brand the

incubator as a iPARK / JIC.

An MOU was signed between the HCST and JICnetwork on February 6th 2006.

iPARK has been in existence for over 4 years and has much experience in

incubation that the other JICnetwork members can benefit from.

1.4 OTHER SUPPORTING ACTIVITIES

1.4.1 European Business and Innovation Centre Network – EBN

The mission of EBN is “to promote the growth of Business and Innovation centres (BICs)

both within and outside the European Union, the aim of which is to set up new small or

medium-sized enterprises (SMEs) and/or new activities within existing SMEs based on

new ideas with growth potential. It will mobilise any system, service or activity which

may directly or indirectly assist its members in achieving their objectives with optimum

professionalism and efficiency.”

In this context, and the context of the European Union Neighbourhood Policy, EBN was

selected to act as a key advisor and supporter of the JICnetwork both during the life of

EJADA, and beyond.



To this end, EJADA contracted with EBN to deliver support to two Study Tours for

Jordanian participants to visit EU Business and Innovation Centres, and one Inward

Mission for EBN staff to provide support to the JICs in Jordan.

1.4.2 Study Tours

Two week-long Study Tours to Europe took place with members of the JICnetwork.

During September/October 2004 a delegation from the JIC at the RSS visited a wide

range of BICs in Austria, Hungary and the Czech Republic. The different business models

enabled the delegates to further develop the local model that best suited the Jordanian

environment.

During February/March 2006, a delegation representing all JICs plus JUMP visited BICs in

Belgium, Luxembourg and France. Additionally, time was spent in Brussels with the EBN

team and staff from the European Commission responsible for Euro-Jordanian links and

enterprise development.

The study tours enabled the Jordanian delegations to understand the value that EBN can

provide as a supporting network for the long term, in addition to exposing them to

varied models and experiences.

1.4.3 Inward Mission

Following the second study tour, it was agreed to bring two consultants from EBN into

Jordan to provide international linkage between the JICnetwork and a European

network.

During the week of 9th to 13th April 2006, Mr Philippe Vanrie, MD of EBN, and Mr Jacques

Pronk, past President of EBN, visited Jordan.

The met with each JIC management team and senior management of the host

organisations as well as presenting the European experience to the Innovation

Conference.

1.5 CONTINUED SUPPORT

It is clear from talking with the host organisations that they have understood the

benefits of innovation support and incubation in the context of wider technology and

science park developments.

To provide support to these organisations with their future plans, and to ensure the

sustainability of the JICs, it is vital that the JICnetwork continues to receive support

beyond the end of EJADA. International cooperation can provide significant knowledge

transfer and support to the network and JIC management.



However, it is strongly recommended that the Jordanian government, in coordination

with the EC Delegation in Jordan, identify ways of delivering such support, leveraging

the international experience and connection to EBN, to shorten implementation times

and minimise errors.



Annex 2: BibliographyThe following documents were consulted during the production of this policy:

EUROPEAN COMMISSION. European Trend Chart on Innovation: Annual Policy Trends

Report for MEDA Countries – 2005.

EUROPEAN COMMISSION. Innovation Tomorrow – 2002.

EUROPEAN COMMISSION. European Innovation Scoreboard – 2004.

YOUNG ENTREPRENEURS ASSOCIATION. Mindset, Environment, Conditions &

Responsibilities for Jordan to Flourish as a Hub for Entrepreneurship. February 2004.

HIGHER COUNCIL FOR SCIENCE AND TECHNOLOGY. Strategy – 2005-2010. August 2004

CITY OF PRAGUE, CZECH REPUBLIC. Regional Innovation Strategy. 2004

Jordan Innovation Policy - A Practical Guide to Wealth Creation

Documents

Transcript of Jordan Innovation Policy - A Practical Guide to Wealth Creation