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Innovation Policy

A Guide for Developing CountriesPublic Disclosure AuthorizedPublic Disclosure AuthorizedPublic Disclosure AuthorizedPublic Disclosure Authorized

Innovation Policy

Innovation Policy

A Guide for DevelopingCountries

2010 The International Bank for Reconstruction and Development / The World Bank

1818 H Street, NW

Washington, DC 20433

Telephone: 202-473-1000

Internet: www.worldbank.org

E-mail: feedback@worldbank.org

All rights reserved

1 2 3 4 13 12 11 10

This volume is a product of the staff of the International Bank for Reconstruction and Development / The World Bank. The findings, interpretations, and conclusions expressed in this volume do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgement on the part of The World Bank concerning the legal status of any ter- ritory or the endorsement or acceptance of such boundaries.

Rights and Permissions

The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The International Bank for Reconstruction and Development / The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center Inc., 222 Rosewood Drive, Danvers, MA 01923, USA; telephone: 978-750-8400; fax: 978-750-4470; Internet: www.copyright.com. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street, NW, Washington, DC 20433, USA; fax: 202-522-2422; e-mail: pubrights@worldbank.org.

ISBN: 978-0-8213-8269-1

eISBN: 978-0-8213-8301-8

DOI: 10.1596/978-0-8213-8269-1

Cover images (clockwise from far left): © Monty Rakusen/cultura/Corbis; © E.O. Hoppé/Corbis;

© Tim Pannell/Corbis; © Juice Images/Corbis; © Tony Metaxas/Asia Images/Corbis; © Tim Pannell/

Corbis.

Library of Congress Cataloging-in-Publication Data Innovation policy : a guide for developing countries. p. cm.

Includes bibliographical references and index.

ISBN 978-0-8213-8269-1 - ISBN 978-0-8213-8301-8 (electronic)

1. Technological innovations - Developing countries. 2. Technology - Economic

aspects - Developing countries. I. World Bank.

HC79.T4I5472 2010

338'.064091724 - dc22

2009054248

v

Contents

Foreword

xv

Preface

xvii

Abbreviations

xi x

Overview

1

Why? The Innovation Imperative

1

What? The Government as a Gardener

2

How? A Pragmatic Agenda

3

What Is Innovation?

4

Policy Concept

5

Policy Functions

11

Policy Implementation

17

Conclusion

22
Notes 24

References

24

Introduction

25

Innovation, Did You Say?

25

What Is This Book About?

27
Part I Policy Concept 29

1 Why Promote Innovation? The Key to Economic,

Social, and Environmental Progress

31

Innovation and Societies: The Long-Term View

32

Technology and Economic Growth

38

Innovation and Emerging Economies

43

Dissemination of Technology

46

New Global Perspectives

48

Contentsvi

Notes 50

References and Other Resources

51

2 How to Promote Innovation: Policy Principles

53

Take a Broad View of Innovation

54

Adopt a fiWhole-of-Governmentfl Approach

54

Create a Receptive and Mobilizing Environment

60
Put Efficient Institutions and Instruments in Place 65

Adapt to Societal Specificities

67

Policy Conclusions for Developing Countries

68
Notes 69

References

70

Part II Policy Functions

71

3 Supporting Innovators

73

Provision of Business Services

74

Entrepreneurship and New Innovating Firms

83

Finance for New and Innovative Firms

89

Bridging Institutions: Clusters and Networks

93

Conclusions

102
Notes 103

References and Other Resources

104

4 Improving the Regulatory Framework

for Innovation 107

International Trade and Investment Framework

108

Domestic Institutional and Regulatory Framework

116

Procurement Policies for Innovation

125

Conclusions

130
Notes 130

References and Other Resources

132

5 Strengthening the Research and Development

Base 135

Global Overview of R&D

135

R&D in Developing Countries

139

Public Sector R&D in Developing Countries

148

Private Sector R&D in Developing Countries

150

International R&D Cooperation and Research

Programs

157

Summary and Conclusions

159
Notes 160

References and Other Resources

161

Contents vii

6 Fostering Innovation through Education

and Training 165
Skills for a Knowledge-Based and Innovation-Driven

Economy

165

Lessons from Developed and Developing Countries

173

Adapting the Way Learners Learn to the Knowledge

Economy

175

Beyond Formal General Education

183

From Brain Drain to Brain Circulation

190

Conclusion

194
Notes 195

References and Other Resources

195

7 Policy Evaluation: Assessing Innovation

Systems and Programs

199

Benchmarking Innovation at the Country Level

200

Microlevel Innovation Surveys

206

Program Evaluation

213

Innovation Policy Reviews

224

Conclusions

23
0 Notes 232

References and Other Resources

233
Part III Policy Implementation 235

8 Policy Implementation: The Art and Craft of

Innovation Policy Making

237

Adapting Best Practices to the Local Context:

The Pragmatic Innovation Agenda

237

How to Create a Conducive Institutional

Framework: The Virtuous Cycle

255

Creating Frameworks for Change: Strategic

Incrementalism

262

Summary of Policy Principles

267
Note 268

References and Other Resources

268

9 Promoting Competitive and Innovative

Industries

271

Innovation, a Global Phenomenon

272

Agriculture

275

Manufacturing

283

Services

288

Policy Conclusions

295

Contentsviii

Notes 298

References and Other Resources

299

10 Building Innovative Sites

30
3

Special Economic Zones

304

Science Parks

310

Clusters

316

Fostering Innovation in a City or Region

323

Conclusion

329
Notes 330

References and Other Resources

331
quotesdbs_dbs4.pdfusesText_7