The Innovation Paradox: Developing-Country Capabilities and the Unrealized Promise of Technological Catch-Up – sheds light on how to address this paradox.
What is the new study Innovation Paradox all about?
The potential gains from bringing existing technologies to developing countries are vast, much higher for poor countries than for rich countries. Yet developing-country firms and governments invest relatively little to realize this potential. That’s the origin of what we are calling ‘The Innovation Paradox’.
Why do firms in developing countries lag behind when it comes to innovation?
The Innovation Paradox, argues that developing country firms choose not to invest heavily in adopting technology, even if they are keen to do so, because they face a range of constraints that prevent them from benefitting from the transfer.
Developing country firms are often constrained by low managerial capability, find it difficult to import the necessary technology, to contract or hire trained workers and engineers, or draw on the new organizational techniques needed to maximize the potential of innovation. Moreover, they are often inhibited by a weak business climate. For example, small and medium enterprises (SMEs) are constantly in a situation where they are putting out fires, they don’t have a five-year plan, they don’t have somebody keeping track of what new technology has come out of some place that they could bring to the firm.
The rates of return to investments and innovation of various kinds appear to be extremely high, yet we see a much smaller effort in these areas. In the developing countries, we need to think not only about barriers to accumulating knowledge capital, we have to think about all the barriers to accumulating all of the complementary factors—the physical capital. So, if I have a lousy education system, it doesn’t matter if I get a high-tech firm because there won’t be any workers to staff it.
Innovation requires competitive and undistorted economies, adequate levels of human capital, functioning capital markets, a dynamic and capable business sector, reliable regulation and property rights. Richer countries tend to have more of these conditions. This is at the root of Paradox. Even though follower countries have much to gain from adopting existing technologies from the advanced countries, in practice, missing and distorted markets, weak management capabilities and human capital prevent them from taking advantage of these opportunities.
The good governance of public financial resources is often more challenging during good times than during bad times. In the event of an unexpected negative shock – say a drought or a sudden decline in demand for the commodities produced in the country – it is generally rewarding, from a political perspective, for the government to launch ‘stimulus packages’ to keep the economic engine running.
This initiative is supported by the World Bank’s Trust Fund for Statistical Capacity Building (TFSCB) with financing from the United Kingdom’s Department for International Development (DFID), the Government of Korea and the Department of Foreign Affairs and Trade of Ireland.
Scaling local data and synergies with official statistics
The themes for this year’s call for proposals are scaling local data for impact, which aims to target innovations that have an established proof of concept which benefits local decision-making, and fostering synergies between the communities of non-official data and official statistics, which looks for collaborations that take advantage of the relative strengths and responsibilities of official (i.e. governmental) and non-official (e.g.,private sector, civil society, social enterprises and academia) actors in the data ecosystem.
- Urban Development
- Social Development
- Public Sector and Governance
- Private Sector Development
- Migration and Remittances
- Law and Regulation
- Labor and Social Protection
- Information and Communication Technologies
- Global Economy
- Financial Sector
- Climate Change
- Agriculture and Rural Development
- The World Region
- South Asia
- Middle East and North Africa
- Latin America & Caribbean
- Europe and Central Asia
- East Asia and Pacific
Agriculture is Uganda’s ‘green gold’ that can transform the economy and the lives of farmers. Why is it then that Uganda’s well documented agricultural potential is not realized? What specific public-sector policies and actions are required to unleash the entrepreneurial energy of Uganda’s largest private sector actors—its farmers?
More than one billion people globally – about 15% of the world’s population – are estimated to have a disability. Most of them live in developing countries. This number is expected to increase as aging, war and conflict, natural disasters, forced displacement, and other factors continue to affect the prevalence of disability.
They encounter attitudinal and environmental barriers that hinder their full and effective participation in society on an equal basis with others.
and ensures their participation in all stages of development programs. With a focus on social inclusion, disability-inclusive development is directly responsive to the World Bank’s twin goals of ending extreme poverty and boosting shared prosperity.
Disability Inclusion and Accountability Framework
with significant strides in operations and analytical work.
This has culminated in World Bank’s first Disability Inclusion and Accountability Framework, which offers a roadmap for:
- Including disability in the World Bank’s policies, operations, and analytical work; and
- Building internal capacity for supporting clients in implementing disability-inclusive development programs.
The Framework has been launched today on the occasion of the 11th Conference of States Parties to the Convention on the Rights of Persons with Disabilities at the United Nations, the premier international gathering of governments, development practitioners, and civil society working on disability inclusion.
How will the Framework support development work?
The Framework provides four main principles for guiding the World Bank’s engagement with persons with disabilities:
- Nondiscrimination and equality
- Inclusion and participation
- Partnership and collaboration
The appendices to this Framework highlight key areas of engagement for a significant impact on the inclusion, empowerment, and full participation of persons with disabilities.
These areas include transport, urban development, disaster risk management, education, social protection, jobs and employment, information and communication technology, water sector operations, and health care.
The Framework is a living document that will be reviewed periodically and strengthened with new focus areas and evidence to reflect ongoing developments.
We invite you to download the Disability Inclusion and Accountability Framework. We hope you find it useful for your work to build inclusive, resilient, and sustainable cities and communities for all.
To facilitate Foreign Direct Investment (FDI), Sri Lanka launched last week an innovative online one-stop shop to help investors obtain all official approvals. To mark the occasion, this blog series explores different aspects of FDI in Sri Lanka. Part 1 put forth 5 Reasons Why Sri Lanka Needs FDI. Part 3 will relate how the World Bank is helping to improve Sri Lanka’s enabling environment for FDI.
But it was not always the case.
. Others including Marubeni, Sony, Sanyo, Bank of Tokyo and Chase Manhattan Bank, had investments in Sri Lanka in the pipeline in the early 1980s.
All this changed when the war convulsed the country and derailed its growth. Companies left and took their foreign direct investments (FDI) with them.
In 2017, Foreign Direct Investment (FDI) into Sri Lanka grew to over $1,710 billion including foreign loans received by companies registered with the BOI, more than doubling from the $801 million achieved the previous year.
The EU’s new General Data Protection Regulation (GDPR) recently went into effect. You have probably received emails regarding your data resident on email servers and applications. And while the media focus has also remained on data concerns with Facebook and other personal data, the impact of the GDPR on developing countries has received little attention. Their exports of data-based services rely on the free flow of data across borders. Strengthened regulation can make international data transfers more difficult. And traditional trade rules and regulatory cooperation cannot resolve this conflict.
Trade unexpectedly rebounded in 2017, after a period of slow growth and despite recent uncertainty about trade policy. Growth in the volume of trade in goods and services jumped to 4.3 percent in 2017—the fastest rate in 6 years (Figure 1). The recovery was widespread, with the largest contributions to growth coming from East Asia and the Euro area. Data just released for the first quarter of 2018 suggests that the faster growth persists: merchandise trade volumes grew by 4.4 percent in the first quarter of 2018 relative to the first quarter of 2017. What explains these developments?