ABSTRACT
In this very short chapter, our aim is to gather some important lessons and implications that arise from the contributions in this volume. Before proceeding, two points are worth noting. First, while many of the arguments and analyses in this book are not radically new, they provide fresh insights into the understanding of innovation systems and capabilities in the context of developing economies. The importance of this is underscored by the thinness of the literature that deals explicitly with these issues. Second, although broad policy and practical lessons can be drawn from the studies contained in this book, the path-dependent, complex nature of technological knowledge and learning implies the need for context-specific understanding of issues. Therefore, we do not attempt here to summarize the main ideas, conclusions or implications of the chapters; rather we recapitulate some points that should attract attention in the research, practice and policy circles.
The performance of an innovation system is strongly influenced by technological learning. In fact, the connection between knowledge acquisition or accumulation and economic development is so strong that they can be seen as strictly complementary. The rate of knowledge accumulation (or learning) facilitates development which in turn allows for more investments in learning.
It is not sufficient to acquire or accumulate knowledge. The appropriate utilization of knowledge is very important for economic development. In this regard, the creation of an effective domestic demand for knowledge (particularly through a vibrant private sector) is very crucial.
Given the cumulative and path-dependent nature of learning and innovation, there can be no universally correct approach to policy making. Even if innovation systems have broad similarities, they still vary greatly across countries and sectors.
As every country seeks to insert itself into global value chains in different sectors, the role of product, process and service quality becomes more important than ever. It is for this reason that a well-developed infrastructure is required to facilitate the innovation capability of an economy. A strong but accessible domestic quality infrastructure is needed to foster the potentials of producers in developing contexts to break through into the global export market.
The value of innovation is greatly amplified by reaching through to the grassroots. This is particularly useful for developing economies (like in sub-Saharan Africa where societies are still largely agrarian).
Acquisition, diffusion, assimilation, capability for scanning, searching and sourcing of embodied technology are a major source of innovation in latecomer economies. Innovation based on these is what we term ‘diffusion-based innovation’. Consequently, developing the capability for technology sourcing and mastery is crucial for firm-level innovation in these countries. A contributor to success in this regard is the management skills (at the micro-, meso- and macro-level) in turning technological dependency into technological interdependency as local technological capabilities are developed.
Active state intervention is central to the strengthening and sustenance of latecomer innovation systems. The specific roles to be played involve the guidance of research and innovation, supply and allocation of resources, creation of a demand pull on learning and innovation, as well as institution building and legalisation. Over time, these roles facilitate other system functions such as knowledge creation, knowledge diffusion, market formation and entrepreneurship.
A crucial role of governments is that it must set the broad vision and direction for other actors because it is the sole agent in charge of policies and institutions as well as the means of enforcement. Governments need to develop the capability to identify weaknesses in market and device the instruments to exploit opportunities as they arise. Vision must be accompanied by strategic choices that are made in the form of policies and the apparatus put in place to implement such policies.
Sometimes systemic weaknesses still persist despite the presence of apparently strong institutions and state involvement. This suggests that strong institutions and government commitment alone are not sufficient to build and strengthen innovation systems in latecomer contexts. Since innovation thrives on knowledge and interactive learning, the required mechanisms for knowledge creation, transfer and uptake as well as persistent intra-systemic interactions need to be strong as well.
Collaboration between all actors within the innovation system including universities and the industry needs to be strengthened. Two policy mechanisms would be useful in this regard. First, properly defined modalities of sharing royalties from patented inventions should be carefully worked out. Secondly, higher investments should be made into research and innovation. Beyond the traditional budgetary allocations made by government, particularly well-publicized competitive grant schemes to recognize and reward innovative initiatives and collaborative efforts might prove useful. In fact, merely raising investments in R&D can be suboptimal if unaccompanied by efforts to transform the operation of systems of innovation at different levels. Policy interventions must account for possible reciprocities that science, technology and innovation policy could have with trade and foreign direct investment, or education, for example. Stronger research–industry linkages require gatekeepers or intermediaries to coordinate the diversity of interests between scientific work and commercial interests.
In the less technology-intensive indigenous industries, producers tend to become innovators mainly as an outcome of better education. This is largely because these industries usually comprise solo entrepreneurs often with poor education. In many developing countries, these types of producers often operate in informal clusters. Opportunities for upgrading in this sector lie in improving access to formal education, providing innovation extension services (for example, support in knowledge sourcing, market access, product upgrading, metrology and record keeping and so on), and much better organization of such sectors.
More often than not, it is the informal cooperative institutions created by producers in the traditional sectors that help them to substitute for state support and weak systemic structures. Cooperation facilitates networking within fragmented innovation systems in the sense that it brings producers closer to other actors that they cannot independently attract or approach. Networking facilitates learning and innovation by providing access to exogenous knowledge, financing and learning opportunities that individual producers would otherwise be unable to access. More work is needed to understand the influence of these types of informal institutions and we hope this area of study will be taken up in future research.
There is a high degree of firm- or network-specific tacit knowledge involved in networking practice especially within fragmented and local innovation systems. In addition to being tacit, some of this knowledge will also be collective, as it will be highly embedded in the organic relationships existing between the actors who are interacting. These features highlight the special value of such cooperative networks.
