Pakistan Institute of Development Economics (PIDE) recently organized a conference on “Doing Development Better : Analyzing the Public Sector Development Program (PSDP)” at Planning Commission Auditorium. One of the areas where Dr. Nadeem ul Haq reiterated was that most of our PSDP allocation goes to brick and mortal, but its prospects in economic development is not reflected. For example, more than 200 universities are build but its contribution to develop and commercialize creative research is not attained.Plethora of information on institutional reforms is available, the most recent and seminal work are National Commission for Government Reforms 2008, and Governing the Ungovernable 2018 by Ishrat Hussain. Ishrat explicitly demonstrated restructuring 25 key institutions, restructuring of these institutions will help to revive the institutional decay and governance deficit. Ishrat vehemently supported the incremental and selective approach instead of reforming all institutions at once.Higher Education Commission (HEC) is among the list of 25 state-centric institutions requires reforms to boost productivity and creative research. Establishment of Higher Education Commission, and subsequent strides of reforms were introduced by Atta ur Rahman during 2002-2008. These reforms facilitated the creation of more universities, unfortunately, these reforms fail to promote creative research that should diffuse in market economies.Governments around the world are substantially investing public funds in Research and Development (R&D), and have created and facilitated national policies to support and commercialize innovation. The United States through the Morrill Act of 1862 has introduced the Land Grant university system to facilitate research and innovation in geographically diffused (rural) areas. Initially these Land Grant Colleges were designated to focus on education, after 25 years through Hatch Act of 1887 the research component were added to the mandate of these Land Grant institutions.The United States Land Grant University model was replicated in Pakistan. Washington State University, Pullman; Iowa State University, Iowa; and University of California, Davis helped to established agricultural universities across Pakistan. Similarly, agricultural related research institutions across Pakistan were also established. Unlike, the United States, these research stations were not fully integrated with their Land Grant institutions.To incentivize the research, researchers, and inability of the federal government to create and commercialize inventions the United States introduced the Bayh-Dole Act in 1980. This act .. “enables universities, nonprofit organizations, and small businesses to own, patent, and commercialize inventions developed under federally funded research programs within their organizations”. The revenue generated from the commercialization of inventions not only supports research and education, but a certain portion of the revenue is also shared with the researcher(s).Along with trade and innovation policies, we can clearly see the hump in the U.S. inventions after 1980s. To promote creative research a model like National Science Foundation should be considered in Pakistan. The Bay Dole type act needs to be considered according to our own existing Intellectual Property (IP) structure to facilitate innovative research.Establishment of the uncreative universities should be stopped. It produces educational inflation (having degrees only). If granting of degrees are not stopped, a bulge of PhDs can be seen applying for clerical jobs. The capacity of already established universities across Pakistan can be enhanced through special treatment by the government. I will suggest choosing selected universities at least one from each province through preferential treatment.Research and Development funds should be provided to these universities, and will be asked to produce at least one invention/patent each year. Independently and/or integrated with the universities, Science and Technology (S&T) labs one at the federal, and provincial levels should also be established with special research and development funds. And, these research labs should also be mandated to generate at least one invention/patent each year at the minimum. Plenty of examples across the word are available who have adopted the same model. A performance based capacity audit should be undertaken at the end of each year.One of the primary reasons for the overall institutions decay in general, and education and research institutions in particular is lacking incentive structure, unfortunately. The salaries structures are not even enough to survive on. I have seen highly educated personnel are leaving the government institutions just because of the prevailing salaries structures, which is far behind market-based salaries. Highly creative minds have started off at Gulf regions just because of lacking the incentive structure in Pakistan.Recently published newspaper article entitled “Dearth of economic experts in Finance Ministry irks Prime Minister” posits “there is not a single ministry official who holds a Ph.D. degree in the field of economics and finance”. Ministries are lacking experts mainly because of prevailing limited financial incentives as compare to market-based. I’m aware of the guys who are working at research institutions, are using Uber and Careem as a secondary source of income to support their daily commuting expenses. How can one imagine a creative research in such environment? Hence, to encourage effective and valuable research, there should be an incentive structure, and such structure should be performance based.Higher Education Commission should consider integrating the educational and research institutions, and provision of research funds to these institutions should be task-oriented (innovative research). To incentivize the researchers, and to promote innovative research Bay-Dole Act type model is required to be implemented. The capacity of the already established universities needs to be improved. If it is not possible to improve the capacity of the whole university, then select a specific department which is relatively performing well in research. Science and Technology (S&T) labs each at the provinces, and federal levels should be established supported by the government. Finally, provision of market-based salaries based on performance (creative research) should be a priority.