This article is part of UNU’s “17 Days, 17 Goals” series, featuring research and commentary in support of the United Nations Sustainable Development Summit, 25-27 September 2015 in New York City.
Goal #10: Reduce inequality within and among countries
A large share of the world’s population — those living in low-income communities of developing countries — are locked out of the global economy. They have limited access to products, markets, and opportunities to increase their well-being and development. Despite all the global technological advances in recent decades, many have not received a significant or fair benefit from such advances.
Many of those in the lower income tiers of the Global South still struggle to address their basic needs. In the developing world, 4,000 children a day die from lack of access to clean drinking water; 80% of the developing world does not have access to electricity; 2.4 billion people do not have access to proper sanitation; and kerosene use leads to 1.6 million deaths a year, due to smoke inhalation or fire. Even collecting water and firewood — tasks mainly carried out by female members of the family or by children — is a daunting chore in many regions across Asia and Africa.
We keep hearing about continuous streams of innovations and technological breakthroughs in various fields. Yet vast populations who could be the main beneficiaries of innovation — given their unmet needs — remain largely excluded from the innovation roadmap of the innovators.
“Necessity is the mother of invention”, says the proverb. One wonders, though, what has happened to that “mother” when it comes to human needs in non-high-income markets: i.e., the “rest of the world” (which happens to be the far larger part in terms of population). Is the income level of the target beneficiary the main driver of innovation? Where there is a lack of such a strong driver, what other factors could serve to catalyse innovation and address the vast array of unmet needs? How can markets become more inclusive and innovative for under-served communities?
There is increasing emphasis on the role of market-based approaches in addressing development issues in the South. In line with the evolution of initiatives that aim to address under-served communities, we are witnessing increased involvement of private actors, including non-governmental organizations, small and medium-sized enterprises, large local firms, and multinational enterprises.
Given that private actors have particular technical and managerial skills, large resource pools, and broad networks, their skills and resources could be used to introduce innovations in less affluent markets. However, the success rate of such initiatives is still limited, and many nascent pro-poor innovation initiatives struggle to scale-up and/or achieve wide diffusion among their target beneficiaries. Despite their potential, many market-based approaches fall short of delivering inclusive innovation while creating mutual value for the wider community and business actors.
Inclusive innovation cannot succeed in a vacuum. For a long time, the main spotlight has been on the supply side of innovations for the under-served, mainly through providing appropriate technologies and micro-finance. One could call this the “hard” side of innovation. But there is a more subtle, elusive side to inclusive innovation that deals with institutions, policies, and mechanisms to ensure acceptance while facilitating adoption among beneficiaries and enhancing social impact.
There are certain typical challenges associated with low-income markets, challenges that hinder the gestation of innovation for under-served communities. These include issues with infrastructure, low purchasing power, and weak or non-existent institutions.
Because of their limited economic opportunities, low-income communities have so far had very limited chances to benefit from growth in the market economies. And even when opportunities do occur, the poor are generally unable to take advantage of them because they often lack good health, education, and financial credit. If market-based approaches are going to bring mutual benefits, there is a need for a deeper understanding about the characteristics of under-served communities. We then must determine how such understanding can be translated into sound policies and strategies for various stakeholders.
To foster inclusion, there is an urgent need for innovative inclusion mechanisms that go beyond the traditional “check-list” approaches to development (such as building more schools to enhance education while ignoring the shortage of skilled teachers, or installing more toilets to improve rural sanitation while failing to raise awareness among beneficiaries). These inclusion mechanisms clearly need to integrate technological, institutional, financial, and business innovations; otherwise, the goals in question may end in failure.
Another component is incentive mechanisms to motivate all the stakeholders to join forces and build synergies, to create a functional “ecosystem” for inclusive innovation. Only through such interactions can actors identify the gaps and missing capabilities, and also reflect on the available resources and capacities in other actors.
True policy innovation requires overarching measures that can enable the different actors to combine their strengths and complement their shortcomings, and thus achieve a synergy effect for enhancing inclusion and reducing inequality.
Flickr / CIMMYT