The Innovation Paradox: Developing-Country Capabilities and the Unrealized Promise of Technological Catch-Up
Chief Economist for Equitable Growth, Finance and Institutions, World Bank Group
Since Schumpeter, economists have argued that vast productivity and income gains can be achieved by investing in innovation and technological catch-up. Yet developing country firms and governments invest very little to realize this potential which dwarfs international aid flows. This talk will explore the reasons behind this “innovation paradox," and discuss the implications for how we measure innovation performance, how we conceive of the Innovation System in developing countries, and the resulting dilemma policy makers face.
The basis for this talk is research presented in the coauthored book of the same title – 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.