After World War II, many small countries in Asia sought to transition from agriculture-based economies to knowledge economies, and more importantly, to advanced industrial and technological economies that relied less on imports from major powers. This transformation was not easy, as these countries adopted development and innovation policies that could be described as a “financial risk.” These policies could either succeed in achieving their goals or end in failure. Taiwan was among the most prominent of these countries, being one of the “Four Asian Tigers” that proved such risk-taking was worthwhile.
Taiwan began its transformational journey in the mid-1970s when it established the Industrial Technology Research Institute (ITRI), which played a pivotal role in lifting the Taiwanese economy out of its traditional agricultural model and placing the country on the map of advanced global economies—particularly in the semiconductor sector. The institute is considered one of the most important institutions that contributed to Taiwan’s transition to a high-tech economy.
Since its founding in 1973, ITRI has played a crucial role in enhancing national industry, promoting innovation, and transferring technology from abroad into the country. At its inception, the institute received about 800 million Taiwanese dollars in government funding (equivalent to 20–25 million USD at the time), which was a significant investment and a major gamble in the context of Taiwan’s economy back then. However, it reflected a strategic national will to enhance industrial capacity through technology.
Over time, government funding for the institute increased significantly, especially as its leading role in the country’s technological transformation became clearer. In recent years, its annual budget has ranged between 15 and 20 billion Taiwanese dollars (roughly 500–650 million USD), with the government covering around 60% of that amount, and the remainder secured through research contracts, industrial partnerships, and technology licensing. This budget supports R&D initiatives across multiple sectors, including semiconductors, green energy, and biotechnology.
In 2025, the budget is expected to increase by 10.77% to reach 25.5 billion Taiwanese dollars, clearly indicating the growing focus on technological advancement amid Taiwan’s rising global influence and the ongoing need to modernize its industrial infrastructure.
Taiwan’s development policies were partly inspired by Japan’s post-WWII industrial model, especially in terms of using the state as a key driver of development, mechanisms for technology transfer, and coordination between the government, academia, and industry.
From this experience, the Government of the Kingdom of Bahrain could benefit from the lessons of the Taiwanese model by establishing a “Bahrain Institute for Innovation and Technology” as a national center for applied research, technology transfer, and industrial innovation.
To fund this project without burdening the general budget, a simple mechanism can be adopted: allocating 1% or less from the annual budgets of each ministry and government agency to create a National Innovation Fund, which would serve as seed capital for the initiative. The institute would be tasked with developing strategic sectors such as clean energy, advanced manufacturing, financial technology, artificial intelligence applications, and other promising fields.
Through focused R&D efforts, enhanced public–private collaboration, development of national talent, and coordinated action among government, academia, and industry, this model could generate a wide economic impact and strengthen Bahrain’s position as a serious competitor in the knowledge economy, particularly among small countries seeking to diversify their income sources.
In conclusion, while this step may represent a financial risk for Bahrain and may require time to yield tangible results, successful international experiences confirm that such “calculated risks” are what truly shape the path to meaningful development. Is it time to begin implementing them?
Source: Akhbar Al Khaleej
Ali Faqeeh, Senior Analyst