Institutional Learning and Change Initiative

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Abstract:

Is innovation important for development? And if so, how? One popular  perception of innovation, that one meets in media every day, is that has  to do with developing brand new, advanced solutions for sophisticated,  well-off customers, through exploitation of the most recent advances in  knowledge. Such innovation is normally seen as carried out by highly  educated labour in R&D intensive companies, being large or small, with  strong ties to leading centers of excellence in the scientific world. Hence innovation in this sense is a typical “first world” activity. There is, however, another way to look at innovation that goes  significantly beyond the high-tech picture just described. In this  broader perspective, innovation – the attempt to try out new or improved  products, processes or ways to do things – is an aspect of most if not  all economic activities. It includes not only technologically new  products and processes but also improvements in areas such as logistics,  distribution and marketing. The term may also be used for changes that  are new to the local context, even if the contribution to the global  knowledge frontier is negligible. In this broader sense, it is argued,  innovation may be as relevant in the developing part of the world as  elsewhere. The paper surveys the existing literature on the subject with  a strong emphasis on recent evidence on the macro and – in particular -  micro level.

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Working Paper Series No 2009-032