STEM stands for science, technology, engineering, and mathematics. There has been a growing emphasis, participation, and investment in STEM education and research. Such a reality has raised a critical question about the purpose of STEM competence development. Despite many claims, the primary purpose of STEM has been to create Wealth for driving prosperity. However, is there a natural correlation between STEM competence indicators like graduates, degrees, quality, publications and patents, and economic prosperity? Highly likely, the answer is no. Despite having adequate clarity about how to transform STEM competence into wealth, there has been a growing urge to increase STEM investment.
We have been witnessing increasing STEM graduates, publications, and patents. For example, STEM graduate production with a bachelor’s degree in the USA has grown from 184,000 in 1966 to 650,000 in 2018. Similar growth has taken place at the M.Sc and Ph.D levels. Most notably, less developed countries have experienced exponential growth. For example, China and India produced 4.7 and 2.6 million graduates respectively, in 2016. On the other hand, publications and patent filings have exponentially grown, reaching 3.6 million patent filings in 2022. Notable growth has occurred in China, rising to 1.58 million in 2022.
Although advanced countries like the USA, Japan, and Germany have been reporting a scarcity of STEM graduates, as many as 85 percent of engineering graduates in India have been failing to get engineering jobs. Graduates in most less developed countries have been facing a similar fate. Hence, observations like “there is a high demand for workers with STEM skills” must be revisited.
Lesson for the purpose of STEM–from the history of STEM competence and wealth creation
- Middle Ages—science and technology took deep root in the Middle Ages. Between the 7th and 14th centuries, Muslim scientists and scholars made significant advancements in diverse areas of STEM, notably in mathematics, astronomy, and medicine. However, the purpose was to follow the instruction of the Holy Quran—know the creation to comprehend the greatness of Allah (creator). Hence, they did not focus on leveraging science to create wealth. Therefore, they used to rely on the grants of khalifas to conduct religious duty. As a result, it did not scale up. Moreover, such an endeavor started decreasing with the eroding grants due to the continued shrinking of the Muslim empire.
- Rise of UK-led Europe—in the 14th century, the UK-led Europe started learning the scientific advancements made by Muslim scientists and scholars and deepening the understanding of wealth creation. They realized that wealth is created through the perceived value in Getting jobs done, whether sleeping, getting a shower, commuting, communicating, or feeding the hungry stomach. Although natural resources and labor contribute, ideas of improving means of getting jobs done play a vital role in creating wealth. They also realized that STEM powers ideas for saving labor, energy, time and material, and improving quality in getting jobs done. Hence, they adopted policies favoring competition to profit from ideas and advance STEM to support the idea flow. Thus, UK-led Europe succeeded in leveraging STEM to create wealth. As a result, profit-making competition intensified to advance STEM, resulting in the rising prosperity and sharpening of the STEM edge of Europe and the gradual erosion of Muslims’ STEM supremacy.
- America’s success in leveraging STEM—UK led Europe’s success in creating wealth from STEM, making products better and cheaper, led to the first industrial revolution. Hence, during this period, like the rest of the world, the USA relied on importing industrial products and capital goods from Europe. The USA focused on harvesting natural resources by importing labor from Europe and exporting the harvest to Europe to finance imports. However, Edison’s demonstration of leveraging STEM through R&D in advancing light bulbs, making them better and cheaper, led to the era of STEM-led wealth creation in the USA. The USA got further experience in how to leverage STEM during the First and 2nd World Wars. Through such learnings, the USA started developing the capacity to expand STEM competence and leveraging it to create wealth. Consequentially, the USA led the 2nd and 3rd industrial revolutions, reaching the top of global prosperity.
- Japan, South Korea, and Taiwan—in the 1950s, Sony led Japan to leverage newly invented semiconductor devices such as transistors and diodes to incrementally advance and reinvent existing electronic, electromechanical, and mechanical products. To succeed in offering better alternatives, as opposed to replicating semiconductor devices, Japanese firms focused on refinement, creating the scope of turning STEM competence into wealth. Besides, Japan’s beliefs, values, and culture have been very much in favor of leveraging STEM through relentless improvement. Subsequently, South Korea and Taiwan followed Japan’s footprint.
- Participation of less developed countries in STEM—the success of expanding STEM and its leveraging in the UK-led Europe and the USA established a positive correlation between STEM competence and economic prosperity. Hence, a belief in natural correlation started to grow. Ironically, they failed to draw the lesson from the Middle Ages. Consequently, less developed countries began investing in acquiring STEM competence, primarily through educating their students with the STEM competence of Europe and the USA, with the hope that it will drive their prosperity. However, upon initial success in leveraging STEM for adopting technologies from advanced countries, they have been witnessing growing unemployment among their STEM graduates.
Basics of wealth creation—in profitably getting jobs done better, creating consumer and producer surpluses
There are many definitions of wealth and how wealth is created and measured. However, this article defines wealth as perceived value in getting jobs done. Hence, wealth creation could be measured by the difference between the cost of inputs and the perceived value. Producers use ideas to mix inputs to offer tools to customers to get jobs done. In a competitive market, customers enjoy a surplus as they are required to pay mostly less than they are willing to pay. On the other hand, producers generate surplus or profit if they succeed in making the cost of inputs far less than the willingness to pay.
STEM is a source of ideas for improving quality and reducing cost. STEM ideas like digital cameras, microwave ovens, word processing software, e-mail, or mobile phones save material, energy, time, and labor while offering more excellent perceived value in getting jobs done. Hence, the wealth created by STEM ideas or competence could be measured as the summation of consumer and producer surpluses (W=CS+PS) due to leveraging STEM competence in offering improved tools to get jobs done better, often at less cost.
Barriers to leveraging the purpose of STEM—creating wealth
In a globally connected competitive market, STEM competence alone does not succeed in creating Producer surplus or profit by offering better tools or innovations to customers. A number of barriers are to be overcome to create consumer and producer surpluses, thereby wealth, in devolving and delivering STEM innovations to customers to get their jobs done better. Unless innovators succeed in overcoming all those barriers, investment in acquiring STEM competence ends up into waste. Such significant barriers that STEM competence must overcome are explained in the following sub-sections.
Beliefs, values, and culture
- Belief–Wealth creation out of STEM competence occurs through pursuing Innovation and entrepreneurship, causing creative destruction to existing products, jobs, and firms. Unfortunately, the belief of students and families in favor of studying STEM is to get employment from existing establishments—notably in less developed countries.
- Values—as opposed to escaping problems, the value of embracing them with the mission of offering solutions is an essential virtue to pursuing STEM-based wealth creation in offering alternatives.
- Culture—pursuing innovation for leveraging STEM requires questioning the status quo and dealing with uncertainty. It requires first-hand exposure to how customers face pains in getting their jobs done with existing means. Empathy and Passion for Perfection are the precursors for developing an intense desire to offer alternatives. Unfortunately, the prevailing culture in less developed countries is contrary to such necessities.
Examples of beliefs: creating high-pay jobs and making us wealthy
- High-quality STEM education is good enough to get high-paying jobs.
- R&D funding and R&D capacity in producing publications and patents will eventually lead to wealth-creating innovations.
- Once the innovation ecosystem is built, wealth-producing innovations will bloom.
- Some people believe in idea protection (patents), and others favor Idea infringement for creating wealth from STEM.
- Replication and imitation will eventually lead to producing high-paying jobs for STEM graduates.
- Protection in the form of tax differential, cash incentives, risk capital, and subsidies in industrialization will result in creating wealth from STEM.
- Creativity, entrepreneurship, and incentives will lead to taking off ideas out of STEM in profitable businesses.
- Access to the military market will open the door to building High-tech success stories.
- If supports are provided for a long time, struggling ideas will take off.
- Vocational skills are key to drive wealth creation from STEM.
- Technology adoption and automation will create prosperity.
Economic and Governance framework affecting the purpose of STEM
- Economic theories—Economists often advise policymakers about economic development issues. Unfortunately, economists suffer from a lack of explicit theories about how wealth is created through STEM in a competitive market. For example, both Cobb-Douglas and Solow Residual consider STEM competence to be an exogenous factor; somehow, it contributes to economic growth as an external factor. On the other hand, human capital theories also do not offer details about the process. Besides, Schumpeter’s and Paul Romer’s theories, like creative destruction and ideas and objects, do not spell out the dynamics of success and failure of STEM competence in succeeding in the competitive space. Such shortcomings lead to unclear or inappropriate economic policies to facilitate wealth creation out of STEM.
- Technology import-driven strategy and policy—labor and natural resource-based economy through the import of technology policy seriously dampens the demand for local STEM competence to pursue innovation. Instead of innovation, such policies create an operating and repairing market.
- Demanding for proven competence—if public procurement requires proven competence, there is little or no scope for pursuing emerging technology possibilities.
- Protection for import substitution—offering incentives for import substitution for developing industrial economies appears to be a significant barrier to leveraging STEM in less developed countries.
In order to leverage STEM competence, competition should be won. Competition takes place in diverse forms, as explained below.
- Incrementally advancing matured products—the race of incremental advances to be won for profiting from STEM competence.
- Enjoying protection for import substitution—protection of profiting from making copies as import substitution is a barrier to serving the purpose of STEM.
- Competing in the reinvention race—the race of reinvention of matured products, through changing of matured technology core with emerging ones, should be won to leverage STEM competence.
- The Natural tendency of monopoly—the race to leverage STEM in making products better and cheaper creates a natural tendency of monopoly. It happens due to the effect of STEM ideas in improving quality and lowering cost simultaneously.
- Winner takes all–the surfacing of the latent natural tendency of monopoly tends to the winner’s emergence. Due to price setting capability with the ability to offer the highest quality at the lowest cost, the winner takes all.
Creating wealth out of technology possibilities for serving the purpose of STM is fraught with pervasive uncertainties, as explained below:
- Embryonic beginning—irrespective of the greatest, invariably, all technology possibilities show up in an embryonic form–with a potential of growth.
- Inferior alternative and loss-making beginning—due to the embryonic emergence, the journey begins with a loss. To turn the loss into profit, technology must progress and cross the quality and cost threshold set by the matured products.
- Pervasive technology uncertainties- not all technologies grow at the same scale and rate. Both the R&D cost of advancement and limit vary, creating pervasive uncertainties.
For serving the purpose of STEM, the challenge is to meet customer preferences in getting their jobs done.
- Misleading customer feedback–customers often do not know the pain of performing their jobs with existing tools. Hence, they tend to offer misleading feedback.
- Empathy and passion for perfection—to understand the latent pain, the challenge is to observe and feel with empathy and generate ideas with a passion for perfection.
Nature of getting jobs done
- Unfolding Jobs to be done–the list of jobs to be done has been expanding. Hence, the scope of the STEM application in helping customers improve their quality of living standards has also been expanding. The challenge is to detect and serve them.
- Endless desire to get better alternatives—the satisfaction of performing the jobs with improved tools does not last long. Hence, they have always been after better means. This is an opportunity as well as a challenge in creating wealth through STEM competence.
To create wealth, STEM competence must cross all those barriers to reach the reality of profitably offering better alternatives to customers out of possibilities. As shown in the figure, deflection from any layer ends in wastage. Hence, the transfer function in converting STEM competence into wealth or waste plays a vital role in meeting the purpose of STEM. Therefore, STEM competence alone is enough to serve the purpose of STEM. For creating wealth for driving prosperity, the challenge is to penetrate each layer and succeed in profiting from the offering of better alternatives by leveraging STEM. Therefore, for creating wealth from STEM, the focus should be on creating idea economy by reducing the barrier and improving the ability to penetrate each layer of the transfer function.