1. Innovation Processes in Developing Countries Specificities and Policy Issues for Inclusive Development Third session Judith Sutz, Universidad de la República, Uruguay EULAKS Summer School The role of social sciences in the construction of knowledge based societies: Latin American and European perspectives

2. Some issues left half-baked yesterday Is equality in some places always the result of inequality in other places? Which is the right unit of analysis for places: countries, regions, localities, networks? In terms of equality, innovation is usually seen as part of the solution, but it can be also part of the problem: …diffusion researchers …have been specially inattentive to the issue of how the socio-economic benefits of innovations are distributed within a social system. When the issue of inequality has been investigated, we often find that the diffusion of innovations widens the socio-economic gap between the higher an the lower status segment of a system (Rogers)

4. About innovation policies and its specificities in developing countries On de-learning processes Why are knowledge and innovation policies so weak in real terms? Which innovation for which development? Innovation policies as social policies; social policies as innovation policies What are the strenghts able to support change?

5. Policies to avoid de-learning processes Gardening policies Connecting efforts and institutions (making the NIS work!) Providing mechanisms for civil society control Building long-terms views of development Making room for diversity in terms of profitability (Finland and its electronic industry)

6. Why are knowledge and innovation policies so weak in real terms? Are they really so weak? Indicators, please If we agree that knowledge and innovation policies are generally weak in developing countries, why is that? Because such policies lack legitimacy? Why is that? Perhaps for lack of real demand?

7. Extracts from recent literature (1) The Latin American and Caribbean production pattern on the one hand, induces private sector and enterprises to express a meager demand for knowledge, and on the other hand, leads domestic agents to mostly seek outward oriented linkages, privileging foreign companies and research laboratories that already have sound reputation and worldwide recognized experience in effective and effi­ cient S&T efforts. Thus a mismatch ensues between demand side needs and supply side offerings, hampering policies impact. (Cimoli et al, 2009: 12) Remember the Sabato triangle!

8. Extracts from recent literature (2) Innovation in the developing world is constrained not on the supply side but in the demand side. That is, it is not the lack of trained scientists and engineers, absence of R&D labs, or inadequate protection of intellectual propriety that restricts the innovations that are needed to restructure low-income economies. Innovation is undercut instead by lack of demand from its potential users in the real economy –the entrepreneurs. And the demand for innovation is low in turn because entrepreneurs perceive new activities to be of low profitability. Rodrik (2007: 101)

9. Why is the demand side of innovation policies so important? Imagine trying to cut a piece of paper with just one blade of a pair of scissors. Its near impossible. Yet that is what we try to do with innovation policy. (...) Innovations are the product of the creative interaction of supply and demand. However, in focusing on how to increase the supply of innovative businesses, policymakers have lost sight of the importance of demand. (Georghiou, 2007:1, 2)

10. What happens when a strong demand for some type of innovation is present in a given society? Can you give an example of that situation for any country? Can you give an example of that situation for your own country? Can you give examples of fields of social life where strong demands for innovation have succeed in setting the public agenda for research and innovation? Where? And the contrary? Where?

11. Which innovation for which development? If we agree that knowledge production and innovation are social processes, then they reflect to some extent social choices (and the way social sciences and the humanities help to express them) Innovation policies would be different if development is seen as: Economic growth Economic development Human development (UNDP) Development as freedom (Amartya Sen) Inclusive development

13. Development as freedom leads us to the need to embedd innovation policies and social concerns: INCLUSIVE DEVELOPMENT WHY? Pragmatic reasons Because this view allows us to recognize that inequality matters for innovation (inequality leads to lack of trust, lack of trust rises transaction costs, high transaction costs hamper innovation) Because we need strong sources of legitimization, and that means that We need a strong and sustainable source of demand for knoweldge and innovation

14. From where can such a demand come from? What if we answer from social policies? Health Housing Nutrition Sanitation All these are huge sources of demand for new knowledge and innovation They enjoy great legitimacy after the defeat of the recipes of trickle-down from economic growth To profit from this legitimacy we need to embed innovation policies with social policies

15. What does this mean? Need for a different perspective regarding innovation policies in developing countries Need for social policies to look at themselves as innovation demanders and, due to that, as makers of innovation policies New markets will be created around useful innovations (Lundvall, 1985) A virtuous circle of knowledge, innovation an more equality will be started

16. There is no need to buy this perspective at the price of excluding others The point is not to exclude this perspective, to give it a chance to prove its goods This is what we mean by innovation policies that take into account some of the specificities of developing countries To build inclusive development by means of knowledge and innovation goes to the heart of what is worth terming a knoewledge society

18. Gracias por una gran oportunidad para pensar juntos! Judith Sutz jsutz@csic.edu.uy