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New and Improved: Much Ado (and To Do) about Innovation in Development
January 27, 2010
“Innovation” is popping up everywhere you turn these days. In her recent speech at the Center for Global Development, Secretary Clinton cited “innovation” as one of the priorities of U.S. development policy. Both the White House Office of Science and Technology Policy and the Department of Treasury are exploring ways to more systematically include “innovation” in the development agenda. The G8 is rumored to be launching an “innovation and development” initiative for Africa at its next meeting.
Increased attention on innovation is welcome – particularly when it’s in service of improving the economic opportunities of the world’s poorest and increasing their access to health care, clean water, education and other services. The trick will be, however, to ensure that the focus on “innovation” goes beyond the latest word-of-the-day and translates into real investments and results.
To start, let’s focus on technological innovation, rather than the interesting, but nebulous range of novel or rediscovered approaches to financing, service delivery, and other development challenges. New technologies are not the end-all or be-all solution to global poverty, but they can increase the productivity of agriculture, control or eradicate infectious disease, and enable climate change mitigation and adaptation. In the 2008 book, White House and the World, CGD President Nancy Birdsall identified the United States’s technological and business prowess as its comparative advantage in addressing global poverty and social dysfunction, calling upon the incoming Presidential administration to harness that prowess to improve the circumstances of the world’s poor.
For the most part, technological innovation is the domain of the private sector. Government spending and policies are critical to support basic research, create environments that enable entrepreneurship and innovation to thrive, and focus private sector creativity and assets around problems for which the market potential is not yet realized.
The Role for Government
The role that the U.S. government should play in technological innovation and development is twofold.
First, the U.S. government, working together with developing country governments, other donors and technical bodies, should focus on creating an enabling environment for innovation: economic incentives, facilitating market mechanisms, and regulatory, trade, and investment policies conducive to the innovation and adaptation of socially beneficial technologies to developing countries. Such efforts have compound benefits. They mobilize private sector resources and skills in the development of key technologies, and contribute to the creation of a local environment more favorable to indigenous technology development.
For example, rich country governments and other donors could come together to use their collective purchasing power, over the long term, to stimulate private sector investment in R&D and scale-up of manufacturing capacity. One way to do this is through an Advance Market Commitment (AMC) or other “pull” financing for the development of a new or modified technology to address global health, clean technology or agricultural needs.
Regulatory capacity building and reform are other examples of public sector policies that can make it easier and more attractive for private actors to put their minds to the problems of the poor. I’m working on a new project that identifies regional, sustainable approaches to clinical trial research and regulation in developing countries, which would better engage and equip local regulators and ethics committees to support the development of health products for neglected diseases. Likewise, efforts to support for information and communication technology (ICT) regulatory and policy making capacity in low-income countries could help foster competition, new business models, and increased private investment in infrastructure and services. With broader access, ICTs offer opportunities to improve the quality and efficiency of government services and stimulate networking and economic development in low infrastructure and rural environments.
Second, the U.S. government, with others, should help create an enabling environment for sustainable access to innovation. For technology to reduce global poverty and disease, it must be broadly, rapidly, and reliably accessible to the consumers and patients who need it. Likewise, the market for technology must achieve a sufficient scale for its development and delivery to be economically sustainable. The U.S. government can support intellectual property management and pricing strategies that increase the affordability of technologies in poor countries and the development of local supply chains to deliver those innovations through community-based, local commercial, and government partners. For instance, CGD’s earlier work on demand forecasting for new drugs, vaccines, and diagnostics identified a range of government actions – from the way procurement is done to how information about financing and utilization is collected and shared – that have a major impact on the ability of pharmaceutical firms to make the business case for investing in manufacturing and distributing products that save lives in low-income countries.
Success in this twofold role will require that the U.S. government and other likeminded donors adopt a disciplined approach in their support for innovation in development and maintain an awareness of the following important policy challenges:
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- Making sure that the appeal of high technology solutions does not draw energy and resources away from proven and effective low-technology strategies for controlling disease and improving food security;
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- Ensuring that public investments, policies and regulations do not disproportionately favor multinationals at the expense of innovators in emerging economies, who often have the cost structures and ability to respond to domestic markets in ways that global players may not;
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- Recognizing that the lag time in technology development necessitates a focus on future conditions – particularly around changing climate conditions and increased energy prices — rather than immediate demands; and
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- Understanding the varied and – in the best case scenario – complementary roles that different agencies in the U.S. and other rich country governments can play with trade and regulatory capacity building, development assistance, and public spending on R&D and training.
A Killer App for Global Prosperity
There’s no question that the development and introduction of the right technologies can have enormous potential benefits for the poor and politically marginalized, and that public policy has a critical role to play in whether and how fast that happens. There’s also no doubt that the word “innovation” has sex appeal: everyone loves the idea of a killer app for global prosperity.
The means and challenges around bringing those dreams to fruition come up more and more around the conference table at CGD, and are subjects on which we’re planning work in the coming months. In the end, we will all have to be as innovative in our analysis and prescriptions as the inventors and entrepreneurs are in solving practical problems.
2 Responses to “New and Improved: Much Ado (and To Do) about Innovation in Development”
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January 29th, 2010 at 11:44 am
Good blog- I particularly like both your point about high tech solutions potentially pulling from effective low tech strategies, and your clever killer app reference. I agree that it’s important to operationalize the hot-button ‘word of the days’ that we hear so much: sustainability, integration, etc. What do these really mean in application? And, why this ‘shift’ to being innovative now? I guess it’s a good way to refocus on the private sector in times when fiscal belts are tight. Also- check out the 2010 Annual Letter from Bill Gates, page 2 focuses particularly on innovation: http://www.gatesfoundation.org.....tions.aspx
March 3rd, 2010 at 2:23 pm
Exploiting Markets in the Informal Sector
People generally view the informal sector as a marginal activity at the peripheral of the formal sector, a labor reservoir that is basically a potential source of workers to supplement the other sectors. They see its importance in terms of providing job opportunities for the lower income groups whose output is associated with cheap and poor quality subsistence goods.
There are others who see the informal sector not as a problem that needs to be solved but rather as a vast investment destination with huge market potential that needs to be exploited.
These views do not necessarily reflect any conflict of opinion but rather, different stages in the continuum of discovery. People’s experiences shape their thinking about markets and ultimately this is what forms the foundations for their marketing decisions and strategies.
Although most people agree that there is huge market potential, they concede that this population is unpredictable, risky and in some instances unviable for commercial engagement primarily because of the high level of informality associated with the sector.
The question remains, how do we exploit markets in the informal sector?
A basic requirement for unlocking the market potential in the informal sector is an appreciation of how marketing infrastructure inter-phases with established relationship structures that in general determines the quantity and quantity of interaction among people in a selected population.
But this is only foundational as actual penetration is best pursued by applying innovative marketing strategies that blends social and economic empowerment of the target group (through information, advice, linkages, etc) with product promotion that recognizes local cultural context and places the highest value in the participation of the target audience in order to maximize absorption.