Innovation in low income countries: A survey report
Abstract
For countries at the bottom of the development pyramid, technological innovation is decisive for industrialisation and catch-up. However, technological innovation has, owing to the costs and risks involved, been traditionally concentrated in a few developed countries. Foreign sources of technology account for much of the productivity growth in most countries. Therefore the development process in low income countries (LICs) can be supported by tapping existing knowledge and know-how. The transfer, adoption and adaptation of knowledge to LICs constitute an important issue for economic growth and global development: innovative capacity in LICs is critical for the successful transfer and adaptation of knowledge, but several constraints prevent firms from innovating. Addressing these constraints, to build functional innovation systems and enhance innovative capacity, is fundamental to socio-economic development in LICs.
The DILIC survey of the diffusion of innovation in Ghana is the first survey in LICs dedicated to the origin and diffusion of innovation within and to these countries. The unique design of the survey provided unprecedented insights into the transmission mechanisms of innovation, expanding our understanding and going beyond the traditional input and output indicators. Such a survey is not only unique for LICs but also for middle and high income countries, where transmission mechanisms have not been receiving the attention the issue deserves. This carefully designed survey offers distinctive evidence on the form and nature of innovations in the LIC context, the origins and the effective channels for the diffusion of innovation within the country and from foreign sources to these countries, the barriers to innovation creation and diffusion, and the space for innovation policy in these economies.
The data show that firms in LICs are innovating, with such activities taking place in both formal and informal sectors. During 2011-2013, almost 80% of the Ghanaian firms surveyed had introduced some innovations, both technological and non-technological. Most innovation in LICs is local learning-based innovation, being diffused mainly within country and based on adoption and adaptation. This is normal in an environment in which research and development departments are extremely rare. The majority of the innovations in LICs are about appropriate technologies and processes in or for the base of the pyramid. That fact reflects the instrumental nature of innovation as a means for development and not its outcome.
Our data show that innovations are primarily developed in response to customer requirements. Clients and customers are also one of the main sources of innovation from within Ghana, together with members of clusters and associations and the use of Internet. Networks of SMEs often enable small firms to enter the value chain and produce something that they otherwise would not be able to produce. International knowledge is mainly acquired via imports, internet, MNEs in the same industry, and participating in export markets. Moreover, we captured how innovations originated by foreign firms are of higher novelty compared to innovations achieved by local firms, suggesting potential positive spillovers.
Lack of specific skills and access to credit, as well as market constraints, are the main bottlenecks during the process of knowledge adaptation and innovation. The successful and sustainable innovations fit the economic, social, and cultural environment and technical status of the LICs by addressing the resource, skill and institutional constraints and the affordability and accessibility typical of these countries.
Finally, the survey showed that, although firms in LICs are innovative (and government is regarded as important innovation partner), they go very largely unsupported. Innovations are rarely recognised and innovation efforts within the firms are not properly assisted, for example by mitigating the financial and skill constraints faced by firms. Firms in many cases have scarce knowledge of policy instruments in place. New thinking and policies to recognise and support innovation are needed in the context of LICs for long-term growth and development.
Citation
Fu, X.; Zanello, G.; Owusu Essegbey, G.; Hou, J.; Mohnen, P. Innovation in low income countries: A survey report. OMDC, Oxford, UK (2014) 62 pp.
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