Understanding innovation in Low Income Countries

Research by the Technology and Management Centre for Development is changing perceptions within the development and business communities about the key role played by innovation in the development process.

Until recently, innovation was often regarded as a low priority for low-income countries (LICs). Compared to major challenges such as extreme poverty, deficient health systems, and climate change-related crises, development of local technological capabilities has been considered a secondary goal. Innovation is often seen as an outcome of development instead of a means for development.

Seeking to shed light on the issue, the Diffusion of Innovation in Low Income Countries (DILIC) project at ODID’s Technology and Management Centre for Development (TMCD) provided the first comprehensive and evidence-based study on innovation in LICs.

It analysed the nature of innovations in LICs, identified their origins and channels for diffusion, elucidated barriers to innovation, and clarified the role of innovation in sustainable development.

The project comprised an international team carrying out extensive fieldwork, case studies, and a national survey of 530 firms in formal and informal sectors in Ghana. The project was funded by the Economic and Social Research Council and the Department for International Development and led by Professor Xiaolan Fu.

The findings demonstrated that, contrary to received wisdom, innovation takes place in both informal and formal sectors in LICs, through adoption and adaptation. Such innovation is unsupported however and not scaled up in a way that might drive structural change in LICs.

The findings suggest that firms derive knowledge from external sources, especially from customers and from participation in value chains and regional production networks. However, in contrast to the situation in other regions, such as East Asia, knowledge transfer from multinational enterprises (MNEs) and from universities to local firms was found to be less strong than expected. Transfer of knowledge from Chinese MNEs appeared to be uneven.

The findings also indicated gender differences in innovation: while women are less likely to introduce technological innovation, they are more likely to adopt marketing innovation.

Helping shape the SDGs

All of these findings have implications for innovation and development policies, and have already had an impact at the global and national levels.

Following a series of consultations by Professor Fu with the UN Industrial Development Organisation (UNIDO) and the UN Department of Economic and Social Affairs (UNDESA), the findings contributed to the development of a new UN Sustainable Development Goal – SDG9 – which aims to ‘promote sustainable industrialisation and foster innovation’.

They also fed into the policy measures for implementation of the goal, in particular, the establishment of a UN Technology Facilitation Mechanism in July 2015. Professor Fu was appointed as the only academic on the UN’s Technology Facilitation Mechanism advisory group in December 2015.

In June 2016 she was also appointed to the Governing Council of a new UN Technology Bank, which is envisaged as part of SDG17 on global partnership and cooperation, and which aims to support technology access, acquisition and utilisation in LICs, and promote research networking in their science, technology and innovation communities.

UNIDO Director General Li Yong commented that 'the project has provided very important knowledge and evidence about innovation in low-income countries to strengthen the implementation of the Sustainable Development Goals'.

Promoting collaboration in Ghana

The project has also had an impact at the national level. In Ghana, the survey findings indicated that there are very few linkages between universities and innovators because of limited incentives. This evidence was presented to the Minister of Environment, Science, Technology and Innovation (MESTI), who acknowledged the importance of the project. Meetings were also held with the MESTI Deputy Minister and senior management, as well as the Ministry of Trade and Industry.

Since then, the Ghanaian government has introduced a $500,000 programme to strengthen university-industry collaboration. Dr George Essegbey, Director of the Science and Technology Policy Research Institute (STEPRI), remarked: 'some of the findings of our ESRC-DFID research formed the basis of the formulation of the new MESTI programme'.

The STEPRI team is now developing a project with MESTI to carry out a survey similar to the Africa Science, Technology and Innovation Indicators survey conducted by AU-NEPAD. This survey will be much larger, involving over 2,500 firms in the formal and informal sector, and DILIC’s survey instrument will be used.

DILIC’s survey instrument has also been adopted by the World Intellectual Property Organisation (WIPO) in its new survey in Uganda on innovation in the agro-processing sector, as well as by the EC FP7-funded MNEmerge project on innovation in Tanzania.

The DILIC project has also helped build local capacity: as a direct result of their partnership with TMCD, STEPRI now leads the MESTI programme and will be in charge of the new survey.

Xiaolan Fu
Professor of Technology and International Development
Professor Pierre Mohnen
Professor Luc Soete
Dr Giacamo Zanello
(now) University of Reading
Dr Jun Hou
(now) Overseas Development Institute

Photo: Giacomo Zanello