The Innovation Paradox: Developing-Country Capabilities and the Unrealized Promise of Technological Catch-Up - Softcover

Cirera, Xavier; Maloney, William F.

Softcover

ISBN 10: 1464811601 ISBN 13: 9781464811609

Publisher: World Bank Publications, 2017

Synopsis

Since Schumpeter, economists have argued that vast productivity gains can be achieved by investing in innovation and technological catch-up. Yet, as this volume documents, developing country firms and governments invest little to realize this potential, which dwarfs international aid flows.

Using new data and original analytics, the authors uncover the key to this innovation paradox in the lack of complementary physical and human capital factors, particularly firm managerial capabilities, that are needed to reap the returns to innovation investments. Hence, countries need to rebalance policy away from R and D-centered initiatives – which are likely to fail in the absence of sophisticated private sector partners – toward building firm capabilities, and embrace an expanded concept of the National Innovation System that incorporates a broader range of market and systemic failures. The authors offer guidance on how to navigate the resulting innovation policy dilemma: as the need to redress these additional failures increases with distance from the frontier, government capabilities to formulate and implement the policy mix become weaker.

This book is the first volume of the World Bank Productivity Project, which seeks to bring frontier thinking on the measurement and determinants of productivity to global policy makers.

About this title

About the Author

The World Bank came into formal existence in 1945 following the international ratification of the Bretton Woods agreements. It is a vital source of financial and technical assistance to developing countries around the world. The organization's activities are focused on education, health, agriculture and rural development, environmental protection, establishing and enforcing regulations, infrastructure development, governance and legal institutions development. The World Bank is made up of two unique development institutions owned by its 185 Member Countries. The International Bank for Reconstruction and Development (IBRD) focuses on middle income and creditworthy poor countries and the International Development Association (IDA), which focuses on the poorest countries in the world.

Review

Too often we see companies and countries paying huge costs trying to invent shiny new things and push out the technological frontier when, for a fraction of the price, they can harvest the lowhanging fruit of processes and products already found in frontier firms. This book highlights the critical importance of such untapped technological adoption for development and explores the reasons countries, counterintuitively, invest so little to effect it. In particular, it brings empirical discipline and economic rigor to the concept of learning to walk before they run, that is, the process of developing firm and country capabilities, and in particular, sophisticated management practices. If CEOs and governments followed this advice they could save themselves billions of dollars while rapidly accelerating growth. --Nicholas Bloom, Eberle Professor of Economics, Stanford University, and Co-Director of the Productivity, Innovation and Entrepreneurship Program at the National Bureau of Economic Research

Edition details

• Publisher: World Bank Publications
• Publication date: 2017
• ISBN 10: 1464811601
• ISBN 13: 9781464811609
• Binding: Paperback
• Language: English
• Number of pages: 214