What can governments do to encourage inclusive innovation?

Whilst innovation is frequently associated with disruptive activities of entrepreneurs and firms, in the last few years we have seen a growing interest in how innovation can be ‘inclusive’, with a particular focus on innovations in developing countries.

We’re beginning to build a picture about ‘inclusive innovation: Research on farmers and informal workers shows that local innovation is essential for to livelihoods (see images). We’ve also seen the growth of ICT as a viable technology in remote parts of the world, with an expansion of ICT innovations in areas like mobile money and micro-insurance for the poor. More recently we’ve seen the launch of the new global sustainable development goals (SDGs) which place inclusive innovation as central to supporting the worlds biggest social problems.

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Examples of local innovation in Kenya: A locally-made fodder cutter (l); an improvised welding device (r).
Images taken from Making Do by Steve Daniels (cc-by-sa 3.0)

What we don’t know much about is the policy that supports this ‘inclusive innovation’. What can governments do to encourage the emergence and growth of inclusive innovation? In a new working paper published by myself and Richard Heeks we look to answer this question. The paper is inspired by earlier work we did on the mobile phone sector in Kenya, which revealed that policy was integral in successfully pushing expansion to low income groups. In this paper we analyse inclusive innovation in a wider set of sectors to build more general advice for policy makers.

Our analysis of inclusive innovation revealed that there were a number of barriers that prevented innovation from being inclusive. First, firms typically did not focus on innovation for more marginalised groups, and even local innovations made by informal firms tended not to spread. Second, we found that innovations can look promising but end up not scaling. There can also be skills deficiencies amongst lower income groups, where they struggle to best use innovations to the maximum, even when they scale.

We suggest five policy objectives for inclusive innovation that can help overcome these barriers:

1)  Orientate innovation systems towards the marginalised – There is evidence that government can form partnerships or support R&D which is more inclusive, involvement of governments in micro-finance and mobile money trials are examples. Market shaping mechanisms such as licencing conditions in the ICT sector can also push firms towards more inclusive innovation

2)  Promote grassroots innovators – Many sectors already have small-scale innovators, who with better networks and improved training could become more influential. Grassroots innovation networks and funds to rural innovators (in India and Thailand respectively), are approaches that can help spread grassroots innovation.

3)  Improve ‘absorptive capacity’ – Scaling of innovation works when suitable ecosystems are in place. That means policy which supports services provision in marginal areas and the presence of appropriate supply chains can be valuable. For instance, policies to support rural informal firms, and micro-finance for more risky enterprises may encourage the emergence of such ecosystems.

4)  Drive more effective use of innovations – Innovations are adopted when they are useful. Policy which supports customer demand and affordability are thus important for scaling. For instance, where governments are able to include innovations in delivery of their government services, such as mobile access to e-government services, this can support skills and demand.

5)  Reduce structural barriers to inclusive innovation – In many countries there can be barriers in terms of underlying policies that prevent inclusive innovation. For instance, excessive rules can make it difficult for small-scale energy producers to exist. Many countries also have onerous rules for firms who provide services for the government, which are often put off small innovative enterprises.

What surprised us when we were compiling this report was that we found many different examples of policies that might be useful for supporting inclusive innovation. Yet, policies tended to be pitched at a specific sector which made it difficult for this suggestions to work together coherently.

As can be seen the policies instruments shown are diverse and will depend on the specific sector and country (which we detail more in the working paper). But we hope that the five core policy objectives outlined can be the first step towards a more systematic framework that allow policy makers to become an important player in driving inclusive innovation.

Foster, C. G. & Heeks, R. (2015) ‘Policies to Support Inclusive Innovation’, Development Informatics Working Paper, No. 61, University of Manchester, UK
Available at http://www.seed.manchester.ac.uk/subjects/idpm/research/publications/wp/di/di-wp61/

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