Perspective of Innovation in Developing Countries: A Study of Economic Transition
Keywords:
Innovation, Innovation Paradox, Technology Adoption, Innovation PoliciesAbstract
The paper describes firm innovation in developing countries and pro- vides a resolution to the innovation paradox. The analysis shows that firms report innovation across the income spectrum and in all sectors, but that innovation often consists of marginal improvements in process or products, rather than significant technology adoption or new product imitation, and it very infrequently involves frontier research. The coexistence of the extraordinarily low levels of innovation-related investment in poor countries with the dramatically high returns thought to accompany technological adoption and Schumpeterian catch-up, particularly far from the frontier, define the innovation paradox.
To conclude, the study shows that the low innovation activity observed in developing countries is not due to some irrationality on the part of firms and governments. Nor is it simply a question of remedying the commonly articulated knowledge-related market failures. Rather, innovation in the developing world faces barriers that are orders of magnitude more challenging than those found in the advanced world. Thus, fostering innovation requires a rethinking of innovation policies.
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