Donor approaches to innovation promotion
Donor programmes follow different approaches to promote innovation in developing
countries. An overarching framework for innovation policy is the innovation system.
Innovation systems refer to the interaction between companies, research organisations
and the state in the creation, diffusion and use of innovations (Science
and Development Network). Donor support to innovation systems spans a broad
range of activities, including the creation of appropriate framework conditions
for innovation, and the development of innovative capacities of companies.
Donors aim to create enabling environments for innovation by advising governments
on property rights, cutting red tape, improving access to finance, or tax incentives.
They can also help improve the conditions for innovation by funding university facilities
and equipment, or training of academic staff.
More targeted approaches may vary for different types of firms (e.g.
World Bank 2004). For very small enterprises, donor support may focus on
basic business advisory and support services, finance and skills development and
providing access to information and communication technologies (ICTs). It may also
include awareness-building about the benefits of innovation or information on the
adoption and application of new technologies (UNIDO
For technologically competent enterprises, examples of donor support are the establishment
of business incubators to facilitate new business start-ups, technology extension
services to expose enterprises to new technologies, and technical assistance to
the commercialization, licensing and patenting of products.
With growing innovative capabilities of businesses, the transfer and diffusion of
new technologies from larger (often multinational) to smaller companies also becomes
an important aspect of innovation policy. Common ways to promote linkages between
firms are value chain and cluster approaches: Supplier and subcontracting relationships
can be instrumental in helping smaller firms access markets and technology of larger
enterprises; in addition, being part of a cluster can help small firms to specialise,
absorb new technologies and procure their inputs.