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2012 17 07_innovation for pro-poor growth freeman centre

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Professor of International Development, Raphie Kaplinsky from The Open University discusses the interaction between innovation and (absolute and relative) poverty in low and middle income countries. He also explores the implications for higher income economies."The development and diffusion of 'Appropriate Technologies' has largely occurred as an outcome of the activities of not-for-profit actors. However, a series of disruptive factors has begun to lead to an innovation dynamic in which market actors (as well as a variety of non market actors) have begun to innovate and diffuse efficient technologies which meet the needs of low income consumers and are more likely to involve poor producers."http://www.ipg.open.ac.uk/
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Innovation for Pro- Poor Growth Raphael Kaplinsky Development Policy and Practice, The Open University Freeman Centre, July 17 th 2012
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Page 1: 2012 17 07_innovation for pro-poor growth freeman centre

Innovation for Pro-Poor Growth

Raphael KaplinskyDevelopment Policy and Practice,The Open University

Freeman Centre, July 17th 2012

Page 2: 2012 17 07_innovation for pro-poor growth freeman centre

http://en.internationalism.org/ir/133/china/graph3

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“The top 1 percent [in the US] gained 57 percent of the increase in national income between 1977 and 2007…During the four-year period of expansion during the Bush presidency (2002–6), the top 1 percent captured 73 percent of the increase ...

This is not a misprint.”Wade, 2012, Challenge, May-June, p3

Page 4: 2012 17 07_innovation for pro-poor growth freeman centre

Global growth and global poverty

GDP Growth p.a (%)

Living below $1.25 pd (MDG1) (m)

1990-2000

2000-2008

1988-1990

2007-2008

World 2.9 3.1 1,668 1,329China 9.9 10.4 724 208India 5.5 7 414 456SSA 2.2 4.9 224 355

Page 5: 2012 17 07_innovation for pro-poor growth freeman centre

Global growth and global poverty

GDP Growth p.a (%)

Living below $1.25 pd (MDG1) (m)

1990-2000

2000-2008

1988-1990

2007-2008

World 2.9 3.1 1,668 1,329China 9.9 10.4 724 208India 5.5 7 414 456SSA 2.2 4.9 224 355

Page 6: 2012 17 07_innovation for pro-poor growth freeman centre

Global growth and global poverty

GDP Growth p.a (%)

Living below $1.25 pd (MDG1) (m)

1990-2000

2000-2008

1988-1990

2007-2008

World 2.9 3.1 1,668 1,329China 9.9 10.4 724 208India 5.5 7 414 456SSA 2.2 4.9 224 355

Page 7: 2012 17 07_innovation for pro-poor growth freeman centre

Global growth and global poverty

GDP Growth p.a (%)

Living below $1.25 pd (MDG1) (m)

1990-2000

2000-2008

1988-1990

2007-2008

World 2.9 3.1 1,668 1,329China 9.9 10.4 724 208India 5.5 7 414 456SSA 2.2 4.9 224 355

Page 8: 2012 17 07_innovation for pro-poor growth freeman centre

HOW DO WE EXPLAIN THIS PRO-RICH GROWTH-TRAJECTORY?

●Globalisation is inherently unequalising●The reserve army of labour -global unemployment – “Planet of slums”●Financialisation●The trajectory of innovation

Page 9: 2012 17 07_innovation for pro-poor growth freeman centre

HOW DOES INNOVATION FIT INTO THIS AGENDA?

●Both:●Choice of technology●Generation of new technology●Both:●Participation of poor in production●Products meeting the needs of the poor

Page 10: 2012 17 07_innovation for pro-poor growth freeman centre

WHAT DRIVES THE DIRECTION OF INNOVATION?

●Demand●Prices of capital and labour ●The character of infrastructure●Path dependency and firm trajectories●Regulatory environment

Page 11: 2012 17 07_innovation for pro-poor growth freeman centre

Capital and scale intensive

Labour intensive, small scale

Inefficient Efficient

Taxonomy of innovation

Page 12: 2012 17 07_innovation for pro-poor growth freeman centre

Capital and scale intensive

Labour intensive, small scale

High wageslow cost of capital

Large marketVibrant entrepreneurship

Inefficient Efficient

Global innovation patterns, circa 1970

Page 13: 2012 17 07_innovation for pro-poor growth freeman centre

Capital and scale intensive

Labour intensive, small scale

High wages, low cost of capital

Large marketVibrant entrepreneurship

Low wages, high cost of capital, Small marketWeak entrepreneurship

Inefficient Efficient

Appropriate but not efficient

Page 14: 2012 17 07_innovation for pro-poor growth freeman centre

?

VU

Page 15: 2012 17 07_innovation for pro-poor growth freeman centre

“Is this a V recovery or a W? I think it’s the latter…

(CEO HSBC Bank, Financial Times, 5th Oct 09)

`

Page 16: 2012 17 07_innovation for pro-poor growth freeman centre

PERHAPS ITS AN

L

Page 17: 2012 17 07_innovation for pro-poor growth freeman centre

OR, MAYBE

Page 18: 2012 17 07_innovation for pro-poor growth freeman centre

BACK TO CENTRE STAGE

Page 19: 2012 17 07_innovation for pro-poor growth freeman centre

FORCES OF DISRUPTION TO THE INNOVATION TRAJECTORY

1. The character of low income markets

Page 20: 2012 17 07_innovation for pro-poor growth freeman centre

Number of Chinese households, by disposable income, 2004 and 2009

Compiled from http://www.portal.euromonitor.com

Page 21: 2012 17 07_innovation for pro-poor growth freeman centre

Number of Indian households, by disposable income, 2004 and 2009

Compiled from http://www.portal.euromonitor.com

Page 22: 2012 17 07_innovation for pro-poor growth freeman centre

FORCES OF DISRUPTION TO THE INNOVATION TRAJECTORY

1. The character of low income markets2. The global diffusion of innovative capabilities

Page 23: 2012 17 07_innovation for pro-poor growth freeman centre

THE GLOBAL DIFFUSION OF INNOVATIVE CAPABILITIES

●Learning in global value chains●Global shares of R&D ●(2%-1970, <10%-1990, 24%-2007)●Education and training●Growth of large emerging country firms

Page 24: 2012 17 07_innovation for pro-poor growth freeman centre

FORCES OF DISRUPTION TO THE INNOVATION TRAJECTORY

1. The character of low income markets2. The global spread of innovative capabilities3. Radical new technologies allow for distributed production●Renewable energy, nanotechnology

Page 25: 2012 17 07_innovation for pro-poor growth freeman centre

FORCES OF DISRUPTION TO THE INNOVATION TRAJECTORY

1. The character of low income markets2. The global spread of innovative capabilities3. Radical new technologies allow for distributed production●Renewable energy, nanotechnology4. New innovators●Dynamic SMEs in rural areas●Grassroots innovation●PPP

Page 26: 2012 17 07_innovation for pro-poor growth freeman centre

Capital and scale intensive

Labour intensive, small scale

High wages, low cost of capital

Large marketvibrant entrepreneurship

Low wages, high cost of capital, Small marketWeak entrepreneurship

Inefficient Efficient

A poverty-reducing innovation path?

Page 27: 2012 17 07_innovation for pro-poor growth freeman centre

Capital and scale intensive

Labour intensive, small scale

High wages, low cost of capital

Large marketvibrant entrepreneurship

Low wages, high cost of capital, Small marketWeak entrepreneurship

Low wages, high cost of capital,

Large market vibrant entrepreneurship

Inefficient Efficient

A poverty-reducing innovation path?

Page 28: 2012 17 07_innovation for pro-poor growth freeman centre

FROM SCHUMACHER TO SCHUMPETER ●The diffusion of AT now driven by the market

Page 29: 2012 17 07_innovation for pro-poor growth freeman centre

Gabon’s Domestic Timber VC

China / EU EU and others

Page 30: 2012 17 07_innovation for pro-poor growth freeman centre

Gabon: Exports to China and EU-27

Source: FAO ForesSTAT, accessed December 2009

Page 31: 2012 17 07_innovation for pro-poor growth freeman centre

●Critical Success Factors (1=not important, 5=very important)

Gabon: Buyers’ Standards

Page 32: 2012 17 07_innovation for pro-poor growth freeman centre

●International regulations and private standards (1=not important, 5=very important)

Gabon: Buyers’ Standards

Page 33: 2012 17 07_innovation for pro-poor growth freeman centre

SOME EXAMPLES FORM THE CAMEROONS

●Chinese Batteries vs Japanese Batteries●50% of life●33% of cost●Motor cycles●Break down more often●Much cheaper

Page 34: 2012 17 07_innovation for pro-poor growth freeman centre
Page 35: 2012 17 07_innovation for pro-poor growth freeman centre

SPEEDING IT UP

●Diffusion has a momentum of its own, but●Address market failures●Not just factor prices●Knowledge imperfections●Sweep of standards●Reorienting systems of innovation●Strengthening the role of non-market actors●Redistributing income


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