Handbook of Innovation Systems and Developing Countries
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Handbook of Innovation Systems and Developing Countries

Building Domestic Capabilities in a Global Setting

Edited by Bengt-Åke Lundvall, K. J. Joseph, Cristina Chaminade and Jan Vang

This Handbook is the first attempt to adapt the IS approach to developing countries from a theoretical and empirical viewpoint. The Handbook brings eminent scholars in economics, innovation and development studies together with promising young researchers to review the literature and push theoretical boundaries. They critically review the IS approach and its adequacy for developing countries, discuss the relationship between IS and development, and address the question of how it should be adapted to the realities of developing nations.
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Chapter 2: Building Inclusive Innovation Systems in Developing Countries: Challenges for IS Research

Tilman Altenburg


Tilman Altenburg 2.1 Introduction Innovation systems in developing countries are different from those in mature OECD countries in a number of ways. They need to cater for different needs; they build on institutional frameworks that tend to be much less formalized, and rules that are less enforceable; and the key agents as well as the incentives that determine their behaviour tend to be very distinct. The innovation systems literature1 explicitly recognizes that policies need to be context-specific. Institutions develop in response to changing economic and social conditions, and vice versa. The choice of technologies depends on initial socio-economic conditions, and, as technological learning is cumulative in nature, the decisions that are taken at the start of evolutionary processes give rise to particular trajectories. As Nelson (1994) has put it, technologies, industrial structures, and supporting institutions co-evolve. This explains why technological knowledge is deeply rooted in the specific institutions of societies, and its content and availability varies across societies, even when factor endowments are similar. A growing body of literature deals with innovation in developing countries. This chapter shows that (despite the fact that context-specificity is recognized in principle) a considerable part of this literature fails to appreciate important peculiarities of developing countries. In particular, it does not systematically address the specific needs for poverty-reducing and socially inclusive types of innovation. Distributional effects of policies are rarely investigated. Furthermore, it tends to overestimate the role of governments as agents of resource allocation and to underestimate the importance of improving basic institutions...

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