One question looms large: How can the prevailing innovation policy approaches of high-income countries be adapted to work for developing countries, if at all?
By GII 2015 Editorial Team
One question
looms large: How can the prevailing innovation policy approaches of high-income
countries be adapted to work for developing countries, if at all?
To find an
answer, the first step is to look at the innovation policy mixes that
high-income economies have fine-tuned over the last decades. Policy makers in
these countries follow an innovation system approach in which
innovation—understood broadly—is the result of complex interactions among all
innovation actors, policies, and institutions. They also draw on the
understanding, born of experience, that converting a scientific breakthrough or
an idea into a successfully commercialized innovation often involves a long
journey with no guaranteed outcomes. Beyond incentivizing research,
complementary measures are required to bring product, process, marketing, and
organizational innovation to fruition.
Two main
policy strands form the core of present innovation policy. On the one hand,
there is a need to improve the framework conditions for innovation; these
include the business environment, access to finance, competition, and trade
openness. On the other
hand, nations also need dedicated innovation policies targeting both innovation
actors and the linkages among them; these include collaborative research
projects, public-private partnerships, and clusters.13 High-income countries
follow a set of dedicated supply- and demand-side innovation policies.This entails creating a strong human capital and research
base that includes research infrastructures, sophisticated firms and markets,
innovation linkages, and knowledge absorption, and that fosters innovation
outputs as captured by the GII. Direct support for business R&D and
innovation is provided in the form of grants, subsidies, or indirect measures
such as R&D tax credits. Universities and public research organizations are
funded either via across-the-board or more competitive funding mechanisms.
In addition,
there is also renewed interest in demand-side measures. This interest is
evident while using classic instruments such as public procurement, as well as
while testing out new approaches to promote innovation specific to overcoming a
key societal challenge in fields such as clean energy and health. Demand-side measures
also facilitate the uptake of specific innovations (including via standards or
regulations) and can foster user-led innovation. Business executives in charge
of innovation, stress the
importance of forward-thinking legislation to support future innovation and the
related markets (e.g., for autonomous cars). They also stress the need for the
international harmonization of regulations for new technologies so they can
diffuse more rapidly and be commercially viable.
Another new
policy development is the focus on creating an ‘innovation culture’ with
businesses, students, and society at large. This is meant to spur greater
entrepreneurial activity and to achieve a better public appreciation of the
role of science and innovation. The design of proper metrics and evaluation
strategies of policies is emphasized too. Indeed, the formulation and
measurement of innovation policies is increasingly treated as a science in its
own right.
Regardless of
these developments, finding the right combination between demand and supply
measures, and between public and private funding for innovation, remains
largely a trial-and-error type of endeavor. In addition, although it is
tempting to think so, a simple migration of policy mixes developed in
high-income countries to developing countries is unlikely to bear fruit.
Innovation policies and institutions need to be context specific, reflecting
the extensive heterogeneity and varying trajectories of countries.
The
heterogeneity among countries aside, broadly speaking a number of differences
between developed and developing countries need to be considered:
First,
evidently the framework conditions for innovation are more challenging in
developing countries. Beyond macroeconomic challenges, this often manifests
itself in poorer infrastructure; weaker product, capital, and labor markets;
and weaker education systems. Ineffective regulatory set-ups that do not
provide the proper incentives to innovation are often a problem. Developing
countries also frequently face inherently dissimilar pressures—for example,
high population growth and a resulting younger population, or more intense
inequalities.
Second, for
sheer budgetary reasons, the capacity to finance, coordinate, and evaluate a
large package of innovation policies is constrained in developing countries.
Although arguably all components of innovation policy dimensions seem
important, tough priority-setting is required. Moreover, in the context of
developing countries, the innovation policy coordination between various local,
regional, and national levels of government is often even more demanding than
it is in developed ones.
Third, the
industrial structure of most low- and middle-income countries is usually
different, with a greater reliance on agriculture, the extraction of raw
materials, and too few—mostly low-value-added— manufacturing activities (e.g.,
food processing, textiles), as well as an increasing reliance on services
industries such as creative sectors, tourism, transport, and retail activities.
Micro- and small businesses play an above-average role for the broader economy
and potentially for innovation too. Although frequently neglected, the informal
sector often matters greatly.
Fourth,
country- or sector specific exceptions aside, innovation capabilities in
developing countries are typically less advanced than those in developed
countries. For one, the human resource base remains comparatively weak, the brain drain abroad is high. Innovation actors and linkages
between them are usually weaker; public research organizations are often the
only actors engaged in research and often operate in an isolated fashion
without links to the real economy, while firms tend to have a low absorptive
capacity. In the formal sector, improvements in maintenance, engineering, and
quality control, rather than fresh R&D investment, tend to drive
innovation. Sources of learning and innovation frequently result from foreign
direct investment (FDI) or technology acquisition from technologies developed
abroad. Firms tend to have a low absorptive capacity and do not interact with
scientific institutions or science more broadly. As noted in the report, collaborating with external partners in innovation remains an important
challenge for companies.
Conclusion:
In turn,
innovation under scarcity is the daily dare of dynamic clusters of small,
informal firms and other actors in developing countries. As outlined by
Mashelkar (a member of the GII Advisory Board) in 2012, the focus is often on
innovating with limited means and with the aim of providing more affordable
access of quality goods and services and improving the livelihood for poorer
segments of the population.
About The Global Innovation Index (GII) 2015:
About The Global Innovation Index (GII) 2015:
The Global
Innovation Index 2015: Effective Innovation Policies for Development is the
result of a collaboration between Cornell University, INSEAD, and the World
Intellectual Property Organization (WIPO) as co-publishers, and their Knowledge
Partners. Download This Extensive Report – LINK
Editors: Soumitra Dutta, Bruno Lanvin, and Sacha Wunsch-Vincent
Editors: Soumitra Dutta, Bruno Lanvin, and Sacha Wunsch-Vincent
Cite This Article:
Cornell University, INSEAD, and WIPO (2015): The Global
Innovation Index 2015: Effective Innovation Policies for Development,
Fontainebleau, Ithaca, and Geneva.
Publication Details:
This publication is not intended to reflect the views of the Member States or the WIPO Secretariat. This work is licensed under the Creative Commons Attribution Non-commercial No-Derivatives 3.0 IGO License, ISSN 2263-3693 ISBN 978-2-9522210-8-5
