Essays on innovation and economic development in developing countries : firm level performance and innovation policy design

Abstract

“Each particular kind of craft needs persons to be in charge of it and skilled in it. The more numerous the various subdivisions of a craft are, the larger the number of the people who (have to) practice that craft. The particular group (practicing that craft) is colored by it. As the days follow one upon the other, and one professional coloring comes after the other, the crafts coloring men become experienced in their various crafts and skilled in the knowledge of them. Long periods of time and the repetition of similar (experiences) add to establishing the crafts and to causing them to be firmly rooted.” Ibn Khladoun The idea that innovation matters for economic development can be traced three centuries before Adam Smith’s classical work on the Wealth of Nations. The concept of division of labor, on the job training and the concept of learning by doing, using and interacting (DUI-mode of learning) were exposed clearly by Ibn Khaldun in the above statement.In the decades following World War II called the “golden age” of development, different strategies were proposed for industrialization and progress. Development economics as a sub discipline of classical economics emerged. Proposals differed on the identification of the growth engine. Disappointment with development, which covered almost all the developing countries during the 1980s, came along with a sterilizing debate between state and market. The failure of state-centered models was followed by a new failure of market-centered models, while some successful growth processes took place without following any of those models mainly in East Asia.The Innovation System (SI) approach emerged as an alternative to the dominant neoclassical paradigm. The SI approach emphasizes the fact that firms do not innovate in isolation but through continuous interactions with other organizations in the system at regional, sectoral, national and global level. The innovation process is interactive within the firms and among the...