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Innovation and Small Enterprises in the Third World

Innovation and Small Enterprises in the Third World

New Horizons in the Economics of Innovation series

Edited by Meine Pieter van Dijk and Henry Sandee

Innovation is crucial for small enterprises to become and remain competitive in the global economy. In this book, the authors have combined theoretical insights with comprehensive case studies on innovation among small-scale enterprises in developing countries, paying particular attention to technological change in clusters of small firms.

Chapter 12: The Role of a Research and Development Institute in the Development and Diffusion of Technology

Bert Bongenaar and Adam Szirmai

Subjects: development studies, development economics, economics and finance, development economics


Chapter 12 15/3/02 8:50 am Page 1 12. The role of a research and development institute in the development and diffusion of technology B. Bongenaar and A. Szirmai This chapter analyses the role of a major research and development organization in the development of technology for and the diffusion of technology to the industrial sector of Tanzania. The research and development organization in question is the Tanzanian Industrial Research and Development Organization (TIRDO). An important aim of TIRDO is to adapt technology to local circumstances and transfer it to domestic industrial firms. The technology projects of the institute are usually fairly small-scale in nature. They make use of domestic resources and try to substitute for imported products. On the basis of an in-depth analysis of a large number of technology projects of this organization, the chapter tries to identify the factors contributing to or hampering the successful development and diffusion of technologies in the context of a developing economy.1 THEORETICAL BACKGROUND The theoretical rationale for funding public research and development organizations is market failure. Given the semi-public nature and positive external effects of research and development (R&D), the volume of private investment in R&D will tend to be suboptimal. In the context of a low income economy, this is compounded by imperfect information, lack of skilled personnel and financial resources in the private sector. This chapter examines whether a public research and development institute can fulfil its functions, through successful development and diffusion of appropriate technologies. We...

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