Innovation and Economic Development
Jan Fagerberg, Martin Srholec & Bart Verspagen
#2009-032
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.
Keywords: innovation and development, innovation capabilities,
technology transfer
JEL-codes: O14, O19, 031, 033, 040
UNU-MERIT Working Papers
ISSN 1871-9872