Innovation in developing economies is a means of wealth and job creation and of economic growth. However, this innovation may be managed quite differently from technological innovation, which is based in developed and emerging economies on the formal creation of knowledge through research and development (R&D). Non-technological innovation and the use of existing knowledge to create value in the marketplace are more likely to be found in the developing world, where these activities are not tracked as part of official statistics.

Many people were involved in the two meetings that were the basis for this volume, and it is possible to mention only a few. The January 2009 Workshop, Innovation for Development: Converting Knowledge to Value, was a joint OECD-UNESCO meeting. Pier Carlo Padoan, Deputy Secretary General and Chief Economist of the OECD, and Walter Erdelen, then Assistant Director-General for Natural Sciences at UNESCO, provided clear direction and the expectations of their respective organisations for the outcomes of the meeting. The meeting was organised by Gang Zhang from the Directorate for Science, Technology and Industry (DSTI), OECD; Tony Marjoram from the Basic and Engineering Sciences Division of UNESCO; and Fred Gault and Jean Woo, then from the Canadian International Development Research Centre (IDRC). Funding was provided by the IDRC, the OECD and UNESCO and, through support to UNESCO, the Swedish International Development Co-operation Agency (Sida).

Innovation can drive growth and create jobs. It happens in the least developed countries as well as in the most developed. In all countries, benefits can be reaped by well-planned policy interventions to support innovation, but this is neither simple nor easy, and no one approach suits all. Innovation policy has to take account of local conditions, economic inequities, demographic challenges and informal economic activity if there are to be positive outcomes. This suggests that the understanding of innovation, and of innovation policy, should have greater prominence on the development agenda, and this volume aims to help that happen.

This chapter presents the principal outcomes of two meetings held at the OECD in 2009 which focused on innovation and development as part of the cross-cutting work on the OECD Innovation Strategy. The first was a workshop, Innovation for Development: Converting Knowledge to Value, which was a joint OECD-UNESCO undertaking. The second was an expert meeting, Innovating Out of Poverty, initiated by the OECD Development Co-ordination Directorate (DCD). The chapter identifies areas for action to be taken and reviews work done since the meetings to rise to the challenge of putting innovation on the development agenda.

This chapter presents some of the overarching issues that emerge throughout this volume. Issues relating to the conversion of knowledge to value and its relevance for development are contemplated from various angles. One focus is innovation systems, learning and the policy implications for developing countries. Another considers a framework for the design of strategies and policies for developing countries and issues relating to heterogeneity, localisation and coherence. Still another is specific channels of knowledge acquisition and commercialisation and the competences and capacities needed for innovation among foreign and local actors.

This chapter discusses the relevance of the innovation systems perspective to Sub- Saharan African countries. It argues that so far, the main concern has been the absorption and adoption of established practice. Efforts to adapt the innovation systems framework to reflect the realities of Sub-Saharan remain limited. In addition, it notes that little attention has been attached to deepening and expanding the specific core capabilities that are fundamental to innovation for development. The importance of addressing this issue is necessary not only to tackle existing challenges but also to orient innovation towards sustainable paths.

This chapter discusses the structural realities of Sub-Saharan African countries and how they relate to the conversion of knowledge to value. It focuses on two central aspects of innovation in developing countries: the dominance of foreign investment in natural resources (particularly in extractive industries) and in infrastructure; and the large informal sector, which contributes about 41% to gross domestic product in Sub-Saharan Africa and represents around 72% of total employment outside the agricultural sector. It does not aim to provide an exhaustive analysis of these issues but to encourage discussion in an innovation systems perspective.

This chapter presents a conceptual framework for innovation policy in developing countries, starting from a distinction between innovation systems in which actors are linked and a knowledge ecology in which the connections between actors are weak or absent. The approach distinguishes between the requirements of middle-income and least developed countries and considers the best ways to search for relevant areas of progress in science and technology, the means to advance the knowledge ecology, and the emergence of multiple innovation systems.

This chapter discusses framework conditions needed to enhance North-South knowledge flows through the transfer of intellectual property, trade and foreign direct investment (FDI). These conditions include mechanisms for investing in human capital, outwardoriented trade policies and FDI policies that do not discriminate against local firms. As well as investing in education, science and technology, and R&D to enhance absorptive capacity for knowledge transfer, needs are identified for technological infrastructure, socioeconomic infrastructure, productive capacity and a national orientation, including transparent regulation, low risk and support for entrepreneurship. Specific incentives for FDI are also discussed.

This chapter explores issues relating to innovation strategies in developing countries. By flagging some key issues in the literature, it identifies the many dimensions of innovation strategies in developing countries and examines the implications for different developing regions. It suggests that innovation strategies that are shaped by domestic market and policy realities are more robust and help to improve the performance of enterprises at country level. As countries differ in their challenges, resources and needs, their policy and development frameworks necessarily vary considerably. This chapter draws some tentative conclusions from the literature, which suggests that strategies based on innovation systems are, to some extent, replicable.