Chapter 1

Construction of the National Innovation

System in Algeria and Economic
Performances: In Search of Action Policies1
Rédha Younes Bouacida

Abstract
Since the end of the 1990s, the Algerian public authorities have implemented
research and innovation policies in order to build a solid National Innova-
tion System (NIS) and improve industrial and economic performance.
Today, the NIS remains immature, which hinders the learning and innova-
tion processes. Our objective here is to analyze under a broad vision the
Algerian NIS by examining its various components, to evaluate the capac-
ities of training and innovation, and to measure the production of the
innovation and the economic performances. Our research question is the
following: How could the Algerian public authorities build a solid NIS in
order to improve economic performance? To answer this question, we use a
research methodology that mobilizes three types of complementary indica-
tors in order to analyze the processes of learning and innovation from a
systemic and interactive perspective. We also use economic performance
indicators in order to put the analysis into a broader perspective. At the end,
we propose action policies in favor of the construction of a complete
Algerian NIS to improve economic performance.

Keywords: National Innovation System; economic performance; innovation

capacities; learning capacities; innovation; Algeria

Introduction
The National Innovation System (NIS) was developed by Lundvall (1988, 1992)
and Freeman (1988) to understand the systemic dimension of innovation in
advanced countries. Thus, analyzed from the conceptual angle of the NIS,
innovation is placed at the heart of economic growth and the performance of

Industry Clusters and Innovation in the Arab World, 1–24

Copyright © 2023 Rédha Younes Bouacida
Published under exclusive licence by Emerald Publishing Limited
doi:10.1108/978-1-80262-871-520231001
2 Rédha Younes Bouacida

advanced economies. While the NIS conceptual framework was initially

conceived to explain differences in the organization of innovation activities in
developed countries, it has been recognized as relevant for examining the situation
in developing countries (Freeman, 1995; Gu, 1999; Lundvall, 2007).
Since the late 1990s, the Algerian government has implemented innovation
policies to build a strong NIS and improve economic performance. Today, the
NIS remains immature and suffers from institutional inertia and underlearning
(Amdaoud, 2017). Indeed, the economy remains undiversified and largely
dominated by the hydrocarbon sector, which accounts for 97% of exports and
generates about 50% of government revenues. As a result, the country is still
experiencing great difficulty in triggering the virtuous circle of innovation-based
growth to emerge from underdevelopment and ensure decent living conditions for
the population.
The analysis of the NIS in Algeria has been the subject of important research
(Amdaoud, 2016, 2017; Ben Slimane & Ramadan, 2017; Casadella & Younes
Bouacida, 2020; Djeflat, 2009, 2016; Younes Bouacida, 2019). However, few
studies (Casadella & Younes Bouacida, 2020; Younes Bouacida, 2019) have used
three types of complementary indicators to analyze this NIS in a broad dimen-
sion, without using economic performance indicators such as technological and
industrial indicators. The objective here is to analyze the different components of
the Algerian NIS, to evaluate the learning and innovation capacities and to
measure the production of innovation, but also the economic performance.
Our research question is the following: How could the Algerian public
authorities build a solid NIS in order to improve economic performance? To
answer this question, our approach is the first of theoretical scope around the
conceptualization of NIS and the role of institutional dynamics in the construc-
tion of learning and innovation capacities. Then, we use three types of comple-
mentary indicators in order to analyze under a systemic and interactive vision the
processes of learning and innovation. The analysis methodology consists of
mobilizing not only secondary sources from data from local and international
institutions but also sources from innovation survey data collected from Algerian
companies. There are three types of complementary indicators: science and
technology indicators (scientific publications, R&D personnel and resources,
patents, etc.), composite indicators (the Global Innovation Index, the Global
Competitiveness Report, etc.), and indicators from the results of surveys on
innovation (the introduction of new products and processes, innovation expen-
diture, staff training, acquisition of licenses and patents, sources of knowledge,
obstacles to innovation, etc.) (Lizunka & Hollanders, 2017).
While developing countries have a wide choice of indicators to use for policy
purposes, all indicators have their strengths and weaknesses. However, the use of
these three types of indicators is quite complementary for analyzing NIS and
innovation processes (Lizuka & Hollanders, 2017). These authors explain that
“composite indicators are available at low cost and provide easily comparable
indicators with other countries. However, these alone are not enough to under-
stand innovation processes and develop policies in developing countries. Science
and Technology (S&T) Indicators, as narrowly defined proxy measures of factors
strictly associated with innovation, provide credible and analytically sound
options. But without a contextual understanding of innovation processes in
 National Innovation System 3

developing countries, it is difficult to fully exploit the results of the analysis.

Indicators linked to innovation surveys, through the direct collection of innova-
tion information from enterprises as key actors, offer the best source of infor-
mation on innovation. Innovation survey data are expensive to obtain though.
And to have policy-relevant results, population samples must be carefully selected
to match policy needs” (p. 26). To go further and put the analysis in a broader
perspective, we also use economic performance indicators. These are indicators of
industrial and technological performance, such as the value added of the
manufacturing sector per capita, exports of high-tech products, etc.
This research work will be organized in four parts. In the first part, we will
review the NIS, capacity building, and economic performance. In the second part,
we will present the NIS in developing countries. In the third part, we will use three
types of complementary indicators as well as some industrial and technological
performance indicators in order to analyze the Algerian NIS and to evaluate both
innovation and economic performance. Finally, in the fourth part, we will pro-
pose policies for a comprehensive NIS in Algeria to improve economic
performance.

National Innovation System, Capacity Building, and

Economic Performance
Conceptual Framework of the NIS
A National Innovation System can be defined as all the networks of institutions in
the public and private sector (companies, universities, laboratories and research
centers, financial institutions, intellectual property institutions, etc.) that produce,
absorb, use, and disseminate scientific and technical knowledge within national
borders (Niosi, Bellon, Saviotti, & Crow, 1992). The state therefore plays an
important role in the development of the NIS. Indeed, it defines scientific and
technological policies and contributes to the establishment of a climate of trust
between the various actors to promote the innovation process.
The construction of the NIS concept approach has developed from two
different perspectives: “narrow” and “broad.” The narrow approach is developed
by Nelson (1993). It is limited to R&D activities, science and technology, and
sometimes education. It only involves institutions and organizations linked to
research and exploration activities (R&D laboratories, research centers, univer-
sities, etc.). As for the broad approach, it is developed by Freeman (1988) and
Lundvall (1992). In this approach, innovation is considered as a continuous
cumulative process also emanating from the diffusion, absorption, and use of
knowledge (Johnson, Edquist, & Lundvall, 2003). At the macroeconomic level,
the broad conception of the NIS therefore extends to all formal organizations and
institutions (governmental structures, compulsory education and vocational
training establishments, rules, laws, etc.) and informal organizations and insti-
tutions (culture, customs, national traditions, values, routines, etc.). In addition, it
is linked to all the financial means available to public authorities to act on eco-
nomic activity, monetary policies, rules for problem-solving, labor market regu-
lation, etc. These affect the innovation system. Today, the broad approach is
4 Rédha Younes Bouacida

generally the most used (Chaminade, Lundvall, & Haneef, 2018) to explain
innovation performance.

NIS and Building Learning and Innovation Capacities

In a conception of NIS in the “broad” sense, the construction of innovation
capacities is of great importance and represents a tool for developing innovation
policies (Adeoti, 2002). Innovation capacities are rooted in technological capac-
ities. The latter represent the skills, knowledge, experience, routines, as well as the
structures and institutional links that are necessary for companies to innovate
(Bell & Pavitt, 1993). Therefore, innovation capacities are linked to the ability to
enhance the skills of economic actors to use knowledge and skills in innovation
processes. Innovation capabilities are therefore linked to R&D activities and
learning processes. But they are also linked to the benefits of basic research
activities. This is therefore a consequence of the organization of the NIS, in which
the learning links (science/industry interface) are well developed. Innovation
capabilities are also linked to the ability of companies to combine internal
knowledge with external knowledge allowing new applications in production
processes.
Innovation capacities are developed by building learning capacities. Learning
refers to the process by which one can solve problems, acquire new knowledge,
that is to say, learn, and learn to learn according to an expression of Lundvall. It
also represents the process of acquiring know-how not only through observation,
imitation, trial, and repetition but also through study, research, and exploration
or relearning processes (Johnson, 1992). As for learning abilities, they are asso-
ciated with acquired knowledge and experience. They also refer to the ability to
develop knowledge and the ability to improve business performance over time.
Learning within the firm is a cumulative, continuous, and dynamic process
(Nelson & Winter, 1982). It has different forms such as learning by research,
learning by observation, learning by imitation, and learning by training. But the
main forms of learning are learning by doing, learning by using, and learning by
interacting (DUI). Beyond these routine learning processes, there are also orga-
nizational learning processes that oppose individual learning processes (Edquist,
1997). These are controlled by people and are linked to the formation of skills
(education and training, continuing education or experience, etc.). The individual
learning process can be defined as a process, a series of cognitive or physical
actions allowing the individual to increase his knowledge or his know-how
(Guilhon & Weill, 1996). As for organizational learning processes, these are
collective mechanisms controlled by companies (R&D and DUI). Organizational
learning is therefore apprehended as the operation by which it is possible to
increase the collective knowledge of a company by carrying out an evolution of
the mental models shared by individuals by simple loop (modification of oper-
ating frameworks) or double loop (modification of frames of reference) (Argyris &
Schon, 1978). It thus includes the processes of dissemination, confrontation, and
exchanges likely to build collective knowledge. The organizational learning pro-
cess thus allows the company, over time, to develop skills to innovate. In short,
organizational and individual learning processes are essential for understanding
innovation processes and estimating the economic performance of companies.
 National Innovation System 5

Along the same lines, Gregersen and Johnson (1997) separate direct learning
processes from indirect learning processes. The former essentially concern the
university system, research centers and laboratories, and formal organizations.
The latter concern the routine learning processes within the companies described
above. It is obvious that these two learning processes are essential to the devel-
opment of learning and innovation capacities. Overall, learning and innovation
capacities are at the heart of the construction of NIS. Therefore, the developing
countries that manage to take off are those whose technological capacities
increase and improve gradually, thus allowing the construction of innovation
capacity for economic performance.

Innovation at the Heart of Economic Performance

Innovation has become a strategic issue for promoting economic performance and
creating wealth. Indeed, today, the world economy is characterized by a phase of
radical innovation in the sense of Schumpeter involving new technologies, pro-
found organizational transformations of companies and markets, as well as
modes of regulation (Dutraive, 2008). This trend is linked to the role of science
and technology, which has become essential for the performance of the produc-
tion and service sectors. Therefore, innovation, technical progress, and capacity
building are among the major elements determining economic performance, both
business performance and macroeconomic performance (Haudeville & Younes
Bouacida, 2022).
Thus, in the knowledge economy, intangible assets have become strategic
elements for economic performance. As such, endogenous growth theory models
emphasize the importance of capital accumulation in all its different forms:
physical capital, human capital, technical capital, technological capital and public
capital. Thus, based on the concept of learning by doing highlighted in Arrow
(1962), Romer (1986) explains in his growth theory model the increasing returns
that accompany the accumulation of knowledge and skills. In another model,
Romer (1990) shows the role of R&D activities in the accumulation of knowledge
to promote innovation processes. On the other hand, Lucas (1988) adopted the
concept of learning to explain the increase in returns to human capital. According
to this economist, human capital, that is to say the stock of knowledge, know-how
and skills incorporated into individuals as a result of training and education, has a
positive effect on growth because it improves labor productivity. As a result,
human capital has a constant marginal productivity and is the source of positive
externalities. This justifies the intervention of public authorities through education
and training policies to promote the development of human skills. Finally, growth
and economic performance also find their source in investment in public infra-
structure (Barro, 1990).
All in all, knowledge has thus become quantitatively and qualitatively more
important as a factor of production (Smith, 2000) and represents the main
resource for the creation of value. It is at the heart of the new economy and now
occupies a key place in innovation processes and business performance. These
performances are dictated by the imperative “to offer products which are in
demand on the world market, in terms of assortment, quality, compliance with
international health or technical standards, delivery times, services accompanying
6 Rédha Younes Bouacida

the delivery products, and this at prices compatible with the prices in force on this
market” (Haudeville, 2012, p. 14). This is the general rule that generates real rents
and makes it possible to generate high amounts of added value.

NIS in Developing Countries

Immature NIS are the least developed systems and concern developing countries.
They are generally characterized by a fragile institutional framework, bureau-
cratic governance, and inertia in the freedom to operate and regulate markets and
inefficient public services. On arrival, the effective application of innovation
policies in the field is penalized. As highlighted above, the Algerian NIS is
immature and suffers from institutional inertia and underlearning (Amdaoud,
2017). As a result, this developing country still has great difficulty in triggering the
virtuous circle of growth based on innovation to improve its economic perfor-
mance. Thus, we assume that in Algeria, the weak regulatory environment, poor
governance, as well as institutional rigidity do not allow the construction of an
NIS and the development of an environment favorable to learning and innovation
processes (H1).
The NISs of developing countries are incomplete due to the inadequacy and/or
ineffectiveness of innovation policies. Indeed, the institutional structures in terms
of R&D are weak and the scientific and technological infrastructures are insuf-
ficient. Expenditure on R&D activities generally does not exceed 1% of GDP
(Haudeville & Le Bas, 2018). This seems to be the case for Algeria, since, despite
the innovation policies that have been in place for two decades, the NIS remains
underdeveloped (Younes Bouacida, 2018) (H2). This seems to be linked to the
weakness of the institutional structure in terms of R&D, which does not generate
specific actions promoting the development of knowledge production and inno-
vation (Casadella & Younes Bouacida, 2020) (H3). Thus, in developing countries,
research activity is largely concentrated in the public sector. Research programs
are generally academic and lack coordination and ambition to achieve results.
Research in the private sector is relatively underrepresented. The weakness of
R&D efforts limits the increase in the stock of knowledge and automatically
reduces the capacity to absorb external knowledge (Cohen & Levinthal, 1990) in a
situation where the part of external origin for these lagging countries scientifically
and technologically is supposed to be dominant. Also, the overall system by which
agents and institutions can increase their stock of knowledge is weak. And the
mechanisms that allow the reappropriation of the return on investment in R&D
to encourage innovation efforts (intellectual property rights, patents, etc.) are
poorly developed. The heterogeneity of NIS between developed countries and
developing countries also stems from weak networking between the various
research centers, public and private, which limit the circulation and promotion of
knowledge (Younes Bouacida, 2019).
The modest economic performance of developing countries is the result of
weak learning and innovation capacities. The weakness of innovation capacities is
primarily linked to the limited efforts in terms of investment in R&D to produce,
use, and absorb knowledge. Then, it is linked to the unavailability of a trained
 National Innovation System 7

workforce and average capacities in qualified people, which do not favor the
possibilities of production and valorization of knowledge in economic activities.
This is the consequence of the weakness of the different forms of learning, namely,
apprenticeship in companies, proper, continuous, or professional training and
theoretical training, in particular the training of scientific and technical skills in
the higher cycle, which is generally disconnected from the production system
(Haudeville & Younes Bouacida, 2018). This seems to be the case for Algeria
(Casadella & Younes Bouacida, 2018). We therefore hypothesize that, among the
systemic failures of the NIS that hamper innovation performance, there is the low
quality of education and the formation of scientific and technological skills in the
higher cycle to promote effective capacities, learning, and innovation (H4). These
forms of learning largely condition the efficiency with which the resources, which
are never inexhaustible, are used (Casadella & Younes Bouacida, 2019). Weak
innovation capacities are also linked to weak interactions between the different
actors of the NIS to promote learning capacities. These capacities are lacking in
developing countries because of the absence of the state as regulator and coor-
dinator between the different actors of the innovation system in order to develop
the sharing and transfer of knowledge. Finally, weak learning capacities are
linked to the lack of learning opportunities for local skills in the labor market in
order to improve the knowledge base (Arocena & Sutz, 2003). In addition, the
weakness of learning capacities is due to the inability of economic actors to
establish relations with other companies in their environment in order to obtain
knowledge and thus benefit from technological advances.
Ultimately, the NIS approach in developing countries is represented by
innovation processes in low- and medium-technology sectors (Johnson & Lund-
vall, 2003 cited by Djeflat, 2009). Unlike developed countries where innovations
in high-tech sectors are sophisticated and grounded in science and radical inno-
vation, innovation in the Global South reflects routine learning perspectives
within small traditional structures (Djeflat, 2009). Innovation is therefore the
result of informal and collective connections between actors and involves learning
techniques through practice, use, and interaction (Djeflat, 2009). NISs in devel-
oping countries are poorly organized and/or incomplete to promote innovation.
The focus is then no longer on what constitutes the systems (actors, networks,
etc.), but rather on the missing components of these systems, according to a
“hollow” analysis (Haudeville & Le Bas, 2018). In any case, the solutions to these
dysfunctions will necessarily be specific to each country and its context to build
complete and structured NIS.

Construction of the Algerian NIS, Capacities, and

Economic Performance
Research and Innovation Policy
The emergence of an innovation policy in Algeria dates back to the end of the
1990s. It was part of the national strategy of building an efficient NIS to promote
a knowledge-based economy. This strategy resulted in the creation of a legal and
8 Rédha Younes Bouacida

regulatory framework and the establishment of financial measures for research

activities as well as the establishment from 1998 of five-year programs for the
development of research and innovation (Younes Bouacida, 2006, 2018).
It can therefore be considered that, for more than two decades, there has been
a continuous and growing commitment in Algeria to scientific research and
technological development, and that these areas now constitute stated priorities.
Overall, the scientific and technological institutional structure in Algeria is not too
different from that of developed countries. Indeed, it is centralized and steered by
the National Council for Scientific Research and Technologies (NCSRT), an
independent body, placed under the supervision of the prime minister. It is
directly involved in the development of research activities within universities and
research centers and ensures the intersectoral coordination of research activities.
It is also responsible for formulating opinions and recommendations on the major
orientations of the national research policy and determining the priorities between
the national programs and assessing their execution. The NCSRT is installed at
the top of the pyramid to lead the national research policy. The public research
system is made up of 48 universities, more than 1,500 research laboratories,
around 30 research centers under the supervision of the MESRS and other
ministerial departments, and around 10 support centers for innovation and the
transfer of technologies. To this must be added a dozen research units, six R&D
agencies that ensure the coordination of research projects, as well as a few support
centers for innovation and technology transfer. Also, the Algerian National
Institute of Industrial Property (ANIIP) was created. Finally, the National
Agency for the Valorization of Research and Technological Development Results
(NAVRTDR), providing the science/industry interface, as well as the National
Agency for the Promotion and Development of Technological Parks (NAPDTP).
Despite this rather important institutional structure, we will see later that the
individual and collective dynamics of all these research institutions within the
National Innovation System is quite timid, and moreover, the learning and
innovation processes are limited (MESRS, 2020).

Capacities and Innovation Activities

Methodology of analysis: in analyzing different aspects of the NIS in a broad
conception, there are generally three types of indicators (Lizuka & Hollanders,
2017):

• Science and technology indicators that measure activities concerning the cre-
ation, dissemination, and transfer of knowledge such as scientific publications,
citations, R&D personnel and resources, patents, etc.
• Indicators resulting from surveys of business innovation. They are linked to the
results of innovation (the introduction of new products and processes, the
percentage of sales of new products, etc.), the expenses of innovation (training
of personnel, acquisition of licenses and patents, product design, market
analysis, etc.), and information on what precedes innovation (sources of
 National Innovation System 9

knowledge, obstacles to innovation, factors that influence companies to inno-

vate, etc.).
• Composite indicators that summarize the multidimensional characteristics of
complex ideas such as innovation to explain innovation processes and estimate
the performance of innovation systems such as the Global Innovation Index
(WIPO), World Innovation Report, Global Competitiveness Report (World
Economic Forum), etc.

To answer our research problem, we opted for a qualitative approach. S&T

indicators largely concern activities related to the production, dissemination, and
transfer of knowledge. Survey indicators on innovation are related to the creation
and absorption of knowledge by firms as well as the innovation process. Finally,
composite indicators are used to estimate performance in terms of innovation,
comparable with other countries. Our analysis methodology will thus enhance
these complementary indicators, of a qualitative nature, as representatives of
developing countries (Casadella, Liu, & Uzunidis, 2015), in order to analyze the
different components of the Algerian NIS and study the relationship between
knowledge creation and performance in terms of development. Therefore, we
mobilized as inputs education and skills training, as outputs the results in science
and technology, and as moderator the science/industry interface. To complete this
research, we will also mobilize certain indicators of industrial and technological
performance such as the value added of the manufacturing sector per inhabitant
of the United Nations Industrial Development Organization (UNIDO) and the
exports of high-technology products of the United Nations Comtrade. Thus,
through this analysis methodology, we will try to verify the hypotheses that we
have previously posed in order to provide some answers to the research problem.

R&D and Innovation Support

Investments in R&D activities as a % of GDP are extremely low, in absolute value
and as a share of the resources devoted to it. Between 2001 and 2017, these
investments experienced a relative increase from 0.23% to 0.54% (UNESCO,
2020). However, these efforts remain well below the regional and global average
(Table 1.1). R&D expenditure by source of funding shows a large primacy of the
public sector (Table 1.2). Universities and public research institutions are the
main places where research activities are carried out. The level of coordination
between these institutions is extremely weak, and links with the productive sphere
are the exception. As for research in companies, it is fairly poorly represented, and
that of foreign firms is insignificant (Table 1.1). Faced with the difficulty for
companies to find financing from banks, public financial mechanisms to
encourage research and innovation projects are lacking. In fact, there are prac-
tically no public financial aid scheme such as direct aid, indirect aid and ax aid.
Finally, private innovation financing initiatives that can take the form of venture
capital or business angels are nonexistent.
The low resources devoted to research activities limit the increase in the stock
of internal knowledge and reduce the capacity to absorb external knowledge. As
10 Rédha Younes Bouacida

such, in the ranking of the Global Innovation Index 2020, Algeria shows a
dropout on the aspect of creation and absorption of knowledge. It ranks,
respectively, 90th and 113th for these two indicators at the global level (Global
Innovation Index, 2020). It is therefore important to strengthen R&D efforts in
various forms in order to increase the stock of internal knowledge and directly
stimulate innovation in companies. Consequently, the construction of dynamic
research infrastructures, the promotion of the activities of researchers through
more attractive remuneration, and the incentive of companies to research and
innovation through subsidies and/or the reduction of factor cost turn out to be
necessary. The financial problem is undoubtedly less constraining here than in
other developing countries. Indeed, the current mode of growth leaves significant
resources in the hands of the state that can be mobilized to increase research
spending.

Table 1.1. R&D Expenditure (as % of GDP) – International Comparison.

Region R&D Expenses (%)

Algeria 0.54 (2017)
North Africa and Middle East 0.93 (2012)
World 2.27 (2018)
Source: UNESCO (2020).

Table 1.2. Funding and Execution of R&D Activities in Algeria (in %).
State Universities Companies Foreign Companies Unspecified
R&D by funding source
93.13 0.07 6.74 0.02 0.03
R&D by sector of execution
54.10 43.20 6.70 / /
Source: UNESCO (2020).

In Algeria, there are relays and support structures for research and innovation
such as the Agency for the Development of SMEs and the Promotion of Inno-
vation and the Support Center for Technology and Innovation. Also, some
Industrial Technical Centers (ITC) intervene in the areas of technology watch,
R&D, and the transfer of technologies useful for innovation and standardization
in favor of companies. There are also more than 50 Technology and Invention
Support Centers (TISC) that have been created recently. The objective is to
promote scientific and technological coordination between universities and
companies in order to stimulate innovation (MESRS, 2020). However, this
institutional relay subsystem represented by the support mechanisms for the
 National Innovation System 11

process of innovation and dissemination of knowledge in favor of companies is

very inactive. Indeed, these institutions are undoubtedly very poorly connected to
economic activity, whether they are research institutions or the few institutions
intended to support companies in technical matters and innovation (Haudeville &
Younes Bouacida, 2012). Therefore, there is no interaction of this relay subsystem
with the other institutions that structure the innovation system (Haudeville &
Younes Bouacida, 2012). The lack of monitoring, long-term strategy, and pro-
gram coordination block the proper functioning of the Algerian NIS and
knowledge dissemination processes (Ben Slimane & Ramadan, 2017). By pointing
out these dysfunctions, it is essential to set up a large-scale action in favor of
defining the role of relays and support structures. This would help bridge the big
gap between knowledge production, distribution, and use.

Education, Training, and Skills Development

Education sector spending (public and private) has increased significantly over the
past two decades. Between 2000 and 2018, they rose from 5% to more than 7% of
GDP (Ministry of Finance, 2020) and remain above the world average of 4.52%
(UNESCO, 2017). Today, the country has a satisfactory record with high
enrollment rates above the regional and global average (Table 1.3). Thus, between
2002 and 2018, the literacy rate of young people aged 15–24 rose from 90.13% to
97.42%% (UNESCO, 2020). The gross primary school enrollment rate exceeds
100%, which shows that the country is capable of enrolling all of its population of
school age. The follow-up of pupils in their school career is quite acceptable since
the effective rate of transition to the first cycle of general secondary education
represents 98.70% (UNESCO, 2018). With a gross enrollment rate close to 100%,
the general level of participation in the secondary cycle is high. This is satisfying
because secondary education completes the basic education that started at the
primary level and builds the foundations for lifelong learning.

Table 1.3. School Enrollment Rate in Algeria – International Comparison

(in %).
Algeria North Africa and World
Middle East
Literacy rate 15–24 97.42 (2018) 90.11 (2019) 91.73 (2019)
Gross primary school 107.33 (2019) 104.27 (2019) 101.59 (2019)
enrollment rate
Gross secondary school 99.61 (2011) 81.69 (2019) 75.99 (2019)
enrollment rate
Source: UNESCO (2020).
12 Rédha Younes Bouacida

However, the quality of education remains fairly average. Indeed, interna-

tional surveys on student achievement show that the country is lagging behind in
the acquisition of basic knowledge. In the Programme for International Students
Assessment (PISA) survey (2015) piloted by the Organisation for Economic
Co-operation and Development (OECD) and which measures the efficiency of
education systems by evaluating the ability to mobilize school knowledge in the
field of science, reading comprehension, and mathematics, Algeria is ranked 69th
out of the 72 countries participating in the survey. And in the Global Competi-
tiveness Report, 2019, the quality of the Algerian education system is also
assessed as average because the scores obtained for this indicator do not exceed
3.5 points on a scale of 7. This is due to the poor performance obtained in terms of
the quality of math and science education, the quality of primary education,
internet access in schools, and the availability of specialized services and training
(Global Competitiveness Report, 2019). Although the quantitative objectives in
the form of school enrollment rates have almost been achieved, there seems to be
a general problem with the quality of the education system to promote the
development of pupils’ abilities, prepare them as well as possible for professional
life, and thus promote skills.
In addition, the numbers enrolled in technical and vocational training as a %
of total secondary school enrollments are low since they do not exceed 10%
(UNESCO, 2020). However, vocational training is essential because it leads to
diplomas aimed directly at entering the labor market, with the possibility of
continuing studies. Therefore, vocational training must be encouraged (particu-
larly in partnership with the private sector), in order to not only meet the needs of
the productive system but also promote the development of a workforce trained at
different levels of qualification in order to promote the possibilities of valorization
of knowledge through its application in production processes.
Public higher education also underwent a remarkable development during the
same period due to the public and private investments made in this sector.
Between 2000 and 2018, the gross enrollment rate in higher education increased
from 15% to nearly 52% (UNESCO, 2020). If this rate is above the world average
of 39%, it remains low compared to the average observed in economies based on
knowledge and innovation, which represents 74% (UNESCO, 2020). On the side
of the registrations of students in graduation, they mainly concern the humanities
and social sciences. In 2017, enrollments in science and technology courses rep-
resented only 25% of total enrollments (MESRS, 2020). This can be explained by
negative career aspirations and prospects due to the low diversification of the
Algerian industrial fabric and the limited job opportunities. Also, it is probably
the consequence of the average level of the pupils, which influences in a negative
way their choices for the scientific and technological courses, deemed difficult. As
for the gross rate of graduates from the first cycle of higher education, it repre-
sents less than 30% (UNESCO, 2018). This remains average to be able to have a
highly qualified population. Finally, the quality of training in higher education
remains low. Indeed, according to the Global Competitiveness Report, 2019, the
skills of graduates are quite average, since the scores obtained for this indicator do
not exceed 3.7 points on a scale of 7. The causes are mainly linked to the lack of
infrastructure in the higher sector, weak supervisory capacities, and the average
quality of university training. Insofar as the issue of technology transfer is crucial
 National Innovation System 13

in Algeria, this requires an improvement in the quality of scientific and technical

training for the development of a qualified workforce and to promote activities
for the absorption of knowledge and technologies and improving the techniques
used.

Research Staff and Scientific and Technological Production

The number of research staff remains insufficient. However, the number of
researchers has quadrupled between 1996 and 2017 (MESRS, 2020). Today, it
totals 2,329 permanent researchers and 35,000 teachers/researchers in full-time
equivalent (MESRS, 2019). In short, Algeria has a total of 819 researchers/million
inhabitants and remains behind the world average, which is around 1,410
researchers/million inhabitants (UNESCO, 2020).
Scientific production has also undergone rapid development. Indeed, it was
multiplied by more than 14 between 2000 and 2018 (Table 1.4). Nevertheless, this
share in the global total, less than 0.3%, remains insignificant (NSF, 2018). We
also see in Table 1.4 that the volume of scientific publications is lower than that of
comparable countries in many respects, such as Mexico, Egypt, or Colombia. In
view of the number of scientific publications in relation to the population, and in
terms of level, with 58 articles/million inhabitants, Algeria is located far from the
world average of 147 articles/million inhabitants (UNESCO, 2015). This rather
average scientific performance can be explained by the following points: (1) The
insufficiency of the means in terms of researchers and other resources as well as
the low efficiency with which these means are transformed into new knowledge
possessing a scientific value. (2) The rapid and continuous growth of student
numbers in Algerian universities in recent years has produced for teachers a
neglect of research activities in favor of teaching activities. (3) The average level of
researchers, in particular because of the quality of their training, who are often
academic, hence the difficulty of publishing in journals with internationally
recognized visibility. Thus, the improvement of Algerian scientific performance is
mainly linked to the increase in the number of researchers. But this cannot be
encouraged without improving the quality of training for research staff, pro-
moting local skills through more attractive salaries, and improving dynamic and
reliable infrastructures (Casadella & Younes Bouacida, 2018).

Table 1.4. Evolution of the Number of Publications of Scientists in Algeria –

International Comparison.
Number of Number of Articles per Million Inhabitants
Publications
2000 2018 2015
Algeria 537 7,643 58
Mexico 6,513 25,290 90
Egypt 3,165 22,018 101
Colombia 867 12,651 61
Source: SCImago Country Rank (2018) and UNESCO (2015a, 2015b).
14 Rédha Younes Bouacida

In order to measure technological performance, we will use the patent indi-

cator, which is generally considered to be a good indicator of innovation.
Compared to countries with similar levels of scientific production such as Tunisia
or Morocco, or even compared to a country with a lower scientific production
such as Kenya, Algeria files fewer patents. Also, the country receives very few
patents abroad, including from the United States Patent and Trademark Office
(USPTO) in the United States, a body considered as a benchmark at the inter-
national level (Table 1.5). In short, Algeria is characterized by a very low level of
the production of innovation, which results in part from the lack of means in
researchers and the resources, which are allocated to R&D activities, the obser-
vation exposed previously (Younes Bouacida, 2018).

Table 1.5. Number of Patent Filings by Residents and Patents Issued Abroad
for Algeria – International Comparison.
Patents Patents Issued to the Patents Issued by the
Filed in Stranger Enters 2010 and USPTO Enters 2011 and
2018 2019 2019
Algeria 152 45 4
Kenya 244 110 52
Tunisia 180 129 34
Morocco 187 335 25
Source: WIPO (2020) and USPTO (2020).

Regarding the propensity of Algerian companies to innovate, field surveys

have shown their low involvement in R&D and innovation activities (Benamar &
Cheriet, 2012; Haudeville & Younes Bouacida, 2008). This is largely linked to the
lack of a qualified workforce and the obstacle of access to financing for innova-
tion (Haudeville & Younes Bouacida, 2012; Sedkaoui, 2016). Other surveys have
also found that the culture of innovation is relatively unresponsive in Algerian
companies (Younes Bouacida, 2006). And, some business leaders view innovation
as a luxury that will only become relevant at a later stage in business development
(Lundvall, 2013). The author explains that this is a misleading and dangerous
interpretation, generally based on a very narrow understanding of innovation as
always based on science and high technology. It is overlooked that improving
performance and growing the business requires continuous learning and incre-
mental innovation (Lundvall, 2013).
Since human capacities in Algerian companies are not linked to research or
innovation activity, they are carried out routinely around recognized gestures and
procedures (Haudeville & Younes Bouacida, 2012). This orientation is not
favorable to the development of learning capacities (individual and collective),
which supposes, on the contrary, constantly questioning, in order to go beyond
 National Innovation System 15

them, existing procedures (Haudeville & Younes Bouacida, 2012). Upon arrival,
innovation capacities are strongly affected. As such, in the Global Innovation
Index that establishes a ranking of countries by evaluating the results in terms of
innovation, Algeria is clearly at the bottom of this ranking (in 126th place).

The Interface Between the World of Research and the Industrial Sector
If the distribution of the number of researchers by discipline shows that 60% of
them work in the fields of science and technology (MESRS, 2020), the valoriza-
tion of knowledge in production processes remains low. Indeed, empirical studies
on innovation confirm the weak flow of information and knowledge between the
world of research and the actors of the innovation system (Amdaoud, 2017; Ben
Slimane & Ramadan, 2017; Casadella & Younes Bouacida, 2019; Djeflat, 2009).
Also, the world ranking of the Global Innovation Index 2020 highlights the
weakness of vertical collaborations and the impact of knowledge in Algeria since
the country is positioned for these two indicators at the bottom of the table (at the
111th and 119th, respectively).
The lack of integration between research institutions and the industrial sector
can be explained by the following factors: (1) The low diversification of the
Algerian industrial fabric and the limited demand for knowledge (Arocena,
Goransson, & Sutz, 2015). (2) The lack of finalization of the orientations of
academic research because of the diagram of the scientific and technological
policy which is not generally articulated at the request of the industrial sector. In
fact, the opportunities for industrial application of the knowledge produced by the
public research sector are limited. (3) The average level of researchers to produce
new knowledge, the observation presented above. (4), The lack of incentives for
university researchers to create innovative projects hinders initiatives to promote
innovative ideas on the market. Finally, (5) there is the problem of the brain drain
phenomenon that constitutes a great loss in terms of highly qualified skills. This
weakens the stock of technological knowledge available through the direct
exhaustion linked to the flight of scientists and researchers abroad (Rapoport,
2017).
Compared to the elements that have been discussed previously, the Algerian
NIS shows certain characteristics specific to immature NIS since its power of
distribution is almost zero. This is clearly an effect of the unstructured (or
archipelago) character of the SNI. Weak capacities for learning and innovation
are linked to systemic dysfunctions and failures of the NIS, weak institutional
coordination, and the lack of effectiveness of public authorities’ actions (Ben
Slimane & Ramadan, 2017). Also, the perpetuation of the rentier economy in
Algeria has contributed considerably to weakening the state and institutions.
According to the Ibrahim Governance Foundation (2018), which measures
governance performance in Africa, in 2020, Algeria is ranked 28th out of 54
countries (with an accelerated deterioration since 2008). And in the 2020 Doing
Business ranking which establishes the ranking of 190 countries for doing business
and measures the regulatory environment for the creation and operation of a local
business, Algeria is positioned in 157th place. Thus, the weak regulatory
16 Rédha Younes Bouacida

environment and poor governance through corruption and bureaucracy do not

allow the construction of social capital as well as the promotion of an environ-
ment favorable to research and innovation activities.

Economic Performances
Today, the Algerian economy does not present a particularly dynamic image and
manufacturing industries (excluding the hydrocarbons sector) occupy a limited
place in it (Haudeville & Younes Bouacida, 2012; Younes Bouacida, 2006).
Despite the efforts undertaken for the liberalization of the economy since the
beginning of the 1990s, the privatization of certain public enterprises, programs
for upgrading enterprises, and the implementation of innovation policies, the
results do not seem to have enabled the appearance of a dynamic productive
system similar to what has happened in other regions of the world.
Indeed, Algerian companies lack the skills and experience to carry out R&D
activities and innovate. Technological capabilities are therefore lacking to improve
economic performance. This is confirmed in an empirical study by Mayor, Blasquez
de la Hera and de Diego Ruiz (2012), which classifies the national technological
capacities of 30 African countries into four groups. Thus, Algeria is in the last
group with the countries with the weakest technological capacities. This is mainly
linked to the failures of combinations of the available base (use of the internet,
human resources, and R&D) and the weakness of the technological effort of public
authorities and companies (technological infrastructures, company performance,
and innovation) (Mayor et al., 2012).
In short, overall manufacturing and technological performance remains weak
and below that of neighboring countries and the average in developing countries
(Table 1.6). Using UNIDO statistics, the weight of manufacturing industries as a
% of GDP has not changed in recent years, and remains below 5%, reflecting an
under-industrialization of the economy. The same observation concerns the level
of manufacturing activity in relation to the number of inhabitants, which remains
low. The competitiveness indicator sanctions these mediocre performances since
Algeria is in 98th place in the world (Unido, 2018). With regard to high-tech
exports, they have deteriorated in recent years. Today, they do not exceed 1% of
all exports of manufactured goods (Fig. 1.1). This reflects the weak R&D

1.4
1.2
1
0.8
0.6
0.4
0.2
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Fig. 1.1. Evolution of high-tech exports in Algeria (in % of exports of
manufactured goods). Source: Comtrade, United Nations, 2020.
Table 1.6. Manufacturing and Technological Performance in Algeria – International Comparison.

Manufacturing Value Added Value of the International

Added (% of GDP) Manufacturing Sector Competitiveness
per Million Inhabitants Index
(Constant 2015 USD)
2000 2017 2000 2017 2018
Algeria 4.30 4.60 133 191 98
Tunisia 19.40 15.00 508 584 67
Morocco 17.30 15.50 288 480 61
Developing 11.20 11.00 204 291 /
countries
Source: UNIDO (2020).

National Innovation System

17
18 Rédha Younes Bouacida

capacities and the limited technological and innovative capacities of companies,

which limits economic performance in the markets.

Policies of Action in Favor of a Complete NIS in Algeria

If the Algerian NIS remains immature and underdeveloped, this is linked to
several factors: (1) Poor governance and institutional rigidity, which are obstacles
to the effective application of innovation policies in the field. RH1 is therefore
validated. (2) The inadequacy and/or ineffectiveness of innovation policies to
promote learning and innovation processes. RH2 is also accepted. (3) The
weakness of the institutional structure for R&D and the inadequacy of the science
and technology infrastructure to promote knowledge creation and the develop-
ment of innovation activities. RH3 is validated. Finally, (4) the weakness of
learning and innovation skills and capabilities. This is a consequence of the low
quality of compulsory education, which negatively influences the formation of
scientific and technological skills in higher education. RH4 is accepted. Thus,
tracks can appear for the action of the Algerian public authorities with the aim of
developing and structuring the NIS and thus improving the economic
performances.

• The institutionalization of modern science: Attempts to reproduce identically

the scientific and technological institutions found in developed countries have
clearly caused institutional rigidity, which has led to a blockage of learning
processes (Mezouaghi, 2004). It is explained that “the anchoring of the actors
of an economy in ancient practices makes them incapable of taking into
account the complexity of knowledge and technologies. . . The absence of
institutions capable of mobilizing scientific and technical resources and
allowing them to the control, as well as the persistence of traditional and
obsolete practices – because they are disconnected from the challenges
and realities of modernity – explain the institutional rigidity of developing
countries” (Mezouaghi, 2004, p. 5). Therefore, insofar as the initial institu-
tional structure was created in Algeria, it is appropriate in a new stage to
promote the institutionalization and professionalization of science. This
necessitates a growing interest in novelty over tradition. Each society organizes
this coexistence in its own way. In the same way, the penetration of the sci-
entific spirit increases, in society, the importance of the principle of falsifiability
à la Popper and the taste for objective and reproducible procedures based on
intuition and case by case (Younes Bouacida & Haudeville, 2015). Ultimately,
the institutionalization of science is the process by which modern scientific
principles and traditions emerge from the social contexts of countries. This will
contribute to the accumulation of new knowledge, promote technological
opportunities, recognize scientific research as a legitimate component of the
 National Innovation System 19

economic system, and finally, unlock learning processes for opening up the
economy to changing global knowledge (Mezouaghi, 2004).
• Act in favor of a good quality of compulsory education and diversify institu-
tions of higher education: In the perspective of a broad approach to NIS, the
role of education and university systems is fundamental in promoting skills and
capacities (graduates, personnel in R&D, etc., for the creation of knowledge
and innovation). In Algeria, if compulsory education has been (almost)
democratized, the fact remains that the quality of education remains fairly
average. As we have seen, this has a negative influence on students’ choices for
science and technology courses in higher education because it is often synon-
ymous with failure for them. Therefore, improving the quality of the
compulsory education system is necessary for inclusive development objectives.
The Algerian education system must therefore fulfill its functions by raising the
level of school achievements and the relevance of teaching. This can be ach-
ieved, for example, by integrating information and communication technolo-
gies (ICT) into the compulsory education cycle. Indeed, it is an opportunity to
develop new pedagogical approaches in order to improve the quality of
teaching. These technologies will also allow the creative forces of teachers and
students to be released. Thus, improving the quality of training in the
compulsory cycle will help to promote the acquisition of knowledge and skills
by students as well as to promote the ability to use them in the future. Ulti-
mately, the students will have a good level, in particular, for better attendance
at scientific and technological courses in the higher cycle. In the end, we will
have made more room for this type of training to promote skills and abilities.
Next, institutional diversity and internal competition between higher education
institutions in a country is essential (Johnson, 1992). Indeed, this makes it
possible to put public and private institutions in competition for the training of
the best skills. This also allows students, for example, who have obtained a
bachelor’s degree in a university course, to join a private management or
engineering school in order to acquire more skills and knowledge. Finally,
institutional diversity makes it possible to increase research capacities, partic-
ularly in certain fields, just as it promotes closer ties between research insti-
tutions and the world of industry. Therefore, the Algerian State must support
private initiatives for the creation of universities and technological institutes.
The objective is to enable the development of an efficient higher education
system, particularly in science and technology for the development of skills and
capacities and the promotion of innovation performance.
• The establishment of good governance: Even when progress has been made in
creating a legal, institutional, and regulatory framework to build a solid NIS in
Algeria, it is the implementation and effectiveness of policies that are prob-
lematic. Therefore, good governance and the quality of institutions are the
guarantee of the application of innovation policies on the ground as well as the
transparency of public action in this area to improve economic performance.
For example, this will make it possible to limit the drain of skills abroad and
encourage the return of the scientific and technological diasporas (STD), to
establish a favorable climate for research in universities and research
20 Rédha Younes Bouacida

institutions, and will contribute to attracting multinational firms, which will

find favorable conditions for investment, and even for scientific and techno-
logical cooperation with local businesses. Ultimately, good governance will
give people the desire to work, to invest, and to creativity and innovation, acts
that are at the heart of growth and the well-being of all.

In short, the development of innovation activities to promote economic per-

formance in Algeria is determined by the construction of a solid and complete
NIS. Therefore, the action policies that we have proposed must be taken into
consideration by the public authorities with a view to improving economic per-
formance for integration into the world economy.

Note
1. We thank Professor Haudeville. B. for providing helpful feedback during the
production of the first draft of this research paper.

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