Innovation Policy in the Age of Decentralized Innovation

I had the pleasure of recently attending the joint OECD-World Bank Conference on Innovation and Sustainable Growth. Innovation policy appears to be having a bit of a renaissance. As OECD Secretary-General Angel Gurría put it, with so much innovation happening as a matter of adoption, or services, innovation policy has moved beyond raising a country’s patenting rate or dollars spent in research labs. Indeed OECD economist Sam Paltridge had pointed out that while the twentieth century tech transfer was marked by leading-edge industrial engineers visiting factories in developing economies, today firms like Intel and Nokia are now just as likely to send anthropologists to talk to end users.

Gurría also noted that innovation is no longer a rich country affair: innovation plays a role in economic growth at all levels of national income. Indeed some of the most exciting innovation comes from some of the poorest corners of the world. Mobile phones now serve as ATMs in Africa. Latin America has some of the most progressive roaming and pricing innovations in the world. Our own Technology Metabolism Index has shown that adoption is not a staged progression from rich countries to poor ones.

While the room full of economists, public policy experts, government representatives and a lone anthropologist (me) could agree that conditions have changed, it did not agree on what the public policy response should be. Controversy focused on whether, as a public policy goal, poor countries should imitate rich countries to ‘catch up,’ in light of how much innovation has changed. If innovation is much more heterogeneous and decentralized than it once was, then we might be more likely to see multiple paths, not a single one. Many pointed out that Korea’s innovation policies that lead to it catching up to rich country income levels would be of questionable legality under current international trade policies. World Bank official Carlos Alberto Primo Braga was particularly concerned that an overenthusiasm for heterogeneous, often user-driven efforts could lead to laissez faire policies, reminding us that “it is my job to alleviate poverty.” This raised the question, is it possible to alleviate poverty and stimulate economic growth without ‘imitate the rich’ as a framework for thinking about how to do it? As an anthropologist, I would answer yes. Here is why.

As we leave the twentieth century and head into the twenty first, we have left the system of mass production and mass media. This has lead to what the social scientists call a splintering. On the one hand, as things go global they get more standardized and generic than ever. On the other hand, heterogeneity and difference are also more important than ever. For example, as multiple devices make their way into peoples’ homes, international standards bodies become more important to ensure there is enough spectrum available for those devices. At the same time, you become your own FCC of your living room, making decisions about how close your mobile phone can be to the TV screen before interference develops. We could say a similar thing is happening with devices. With over a billion people using information technologies, it is becoming increasingly difficult to say what they are actually using them for, other than to connect with others in some way. A pretty generic explanation! Yet there is increasing diversity in devices, with MIDs and netbooks and Classmates now in the picture, each satisfying needs better than a single, generic device could ever do.

Prof. Luc Soete provided the public policy corollary to this principle. International trade standards, including IPR, are increasingly important to get right if all countries are going to be competitive on a global marketplace. It is no use providing aid to poorer countries if (as some have charged) rich countries use the IPR system as a way to close their markets. At the same time he predicts that better trade rules might foster more geographic specialization in the kinds of innovations each country produces. The twenty first century is in its infancy, but if the splintering theory proves true, there still will be plenty of room for large scale players such as standards bodies and multinational companies to innovate and enable others to do the same. What changes, however, is that it becomes even more important to have institutional innovators alongside smart people making smart technologies.

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