Policy makers and development professionals around the world feel a common sense of urgency to reduce inequality and address the needs of the most vulnerable in society, notably the over one billion people who live in extreme poverty. We must have a clear and unforgiving focus on the results that we seek: to end extreme poverty, build shared prosperity, and improve living standards for the world’s poorest people, through inclusive and sustainable growth.

Building on concrete examples, this book explores a number of emerging topics in innovation policy for sustainable growth and shared prosperity and develops the concept of experimental innovation policy, which integrates monitoring and evaluation at the policy design stage and throughout implementation. This approach can help improve the quality and efficiency of public expenditures supporting innovation policy.

Building on concrete examples, this volume explores a number of emerging topics in innovation policy for sustainable growth and shared prosperity. The book develops the concept of experimental innovation policy, which integrates monitoring and evaluation at the policy design stage and throughout the process of policy implementation. This approach can help improve the quality and efficiency of public expenditures supporting innovation policy. Policy making based on experimentation is particularly important for new and emerging innovation domains, where the scope for learning and improvement is the greatest.

This chapter discusses open economy industrial policy, which focuses on connections among domestic firms and between firms and the world market. In contrast to import substitution policies, the objective of such policies is to increase economic openness in order to enhance flows of knowledge, foster productive innovation and strengthen non-traditional exports. This chapter shifts the debate on government activism in support of globally competitive industries from picking winners to a process of step-by-step transformation of the private and public sectors.

Outside of China, despite rapid economic growth in many low- and middleincome countries, there has been relatively little progress in meeting the Millennium Development Goals (MDG1) target of halving the incidence of global poverty by 2015. Part of the explanation for this has been the historic trajectory of innovation. During the 20th century, most global innovation had its origins in the north, producing products for high-income consumers, developing technologies that excluded poor producers and were energyintensive and polluting. This innovation trajectory gave rise to the not-forprofit appropriate technology (AT) movement after the 1970s. But many of the technologies which it sought to diffuse were inefficient and scorned by both producers and consumers. However, a series of disruptive factors – the growth of low-income consumers during the global economic slowdown, the development of radical technologies (such as mobile telephony and renewable power), the development of capabilities in low-income economies and the emergence of new types of innovation actors – have begun to transform the AT’s potential to support pro-poor growth. While the new AT movement will be largely market-driven (since it provides the potential for profitable production), important dimensions of this market-driven process can be supported by policy.

There is increased interest in innovation for people at the base of the pyramid (BOP innovation). The term is used loosely and there are various definitions. This chapter offers a broad definition of BOP innovation and gives a rationale for BOP innovation. It provides a framework for thinking about BOP innovation and presents some case studies. It discusses policy instruments for promoting BOP innovation and suggests some policy approaches, contrasting those of India and China. Finally it proposes some ideas about what more could be done.

While the field of innovation studies is extensive and rapidly expanding, analysis of innovation policy is much less developed. This chapter examines public interventions to support institutional infrastructure for technoentrepreneurship as an example of an endogenously developing policy process. Mainstream recommendations to support techno-entrepreneurship and innovation clusters focus on best-practice institutions. Consequently, the United States (Silicon Valley, Route 128, etc.), the United Kingdom, Finland, Singapore and Israel emerge as example to emulate. The chapter extends the discussion of these “usual suspects” by examining cases of improbable success: the emergence of Silicon Valley siblings (local ecosystems of innovation) in middle-income economies and localities with a deficient institutional environment. It juxtaposes two public policy approaches to supporting private innovation entrepreneurship: a traditional administrative approach and an emerging search networks approach.

This chapter describes policy initiatives of India’s Department of Biotechnology for adapting and commercialising biotechnologies to provide affordable quality solutions for local needs in health care, agriculture, industry and the environment. In selected policy areas, India’s promotion of global consortia involving local and foreign firms, universities and public research entities supported by domestic public/private partnerships, appears to have been critical in spurring learning, including about structured research protocols that lead to commercial products. The chapter argues that governments and firms need to better learn from evolving local experience through more rigorous performance measurement. This includes the more systematic incorporation of lessons from impact evaluation in project and programme design (with explicit metrics to report and learn from failure), and the institutionalisation in project and programme implementation of “diagnostic monitoring” routines for continuous improvement through redesign.

This chapter explores the role that innovation can play in achieving a greener economy, with a focus on radical innovations that may help move from “business as usual” to a desirable green growth path. It reviews the role of different types of innovation for green growth, the rationale for innovation policies in a green growth strategy, and experience to date with policies that favour more radical green innovation. It concludes by making the case for mechanisms that facilitate the sharing of what works for green innovation.

Performance measurement is receiving more and more attention, but the implementation of good measurement systems and the utilisation of results remain a challenge. This chapter reviews the practices of various organisations drawing on the literature and the author’s own experience working with institutions around the word. It identifies factors that contribute to greater utilisation, including the relevance of evaluations, the credibility of results and the commitment of managers to use evidence to drive decision. This chapter argues that performance measurement needs to be embedded within a broader evaluation system that fosters critical thinking and supports continuous improvement as part of the policy cycle.

This chapter examines how two historically low-technology economies, Finland and Israel, assumed leadership in new and rapidly evolving innovation- based industries. It argues that “Schumpeterian development agencies”, the Finnish Fund for Research and Development and the Israeli Office of the Chief Scientist in the Ministry of Trade and Industry, played a transformative role, by introducing new science and technology policies and facilitating industrial restructuring. However, in contrast to the literature on the developmental state, these agencies were located on the periphery of the public sector and had few hard resources. The chapter describes how their peripheral location facilitated successful experimentation. It also explains how ostensibly marginal agencies were able to scale and monitor new initiatives successfully. More specifically, it shows that reform-oriented policy makers in small states were able to leverage extensive inter-personal networks to facilitate scaling and international openness to ensure monitoring. In identifying the specific mechanisms used by policy makers to introduce, scale and monitor policies, it also shows why these two historically innovative economies have struggled to support experimentation in recent years.