New technologies are often seen as a quick fix for some of the most difficult MSD challenges.
The potential of emerging technologies – such as artificial intelligence, 3D printing, or blockchain – is certainly exciting. However, we need to take a step back and look at the wider context before we look to transplant the latest innovation.
The most recent ‘rapid assessment’ research study undertaken for the UK Department for International Development (DFID) Democratic Republic of Congo (DRC) private sector development programme argues that we should not expect to cut and paste technologies from one context to another. Rather, we need to look carefully at the network of interconnected support that allows technologies to function in a new context, and think about how such ‘innovation systems’ can be strengthened.
The impact of tech on market systems
There has been a massive technological shift in recent years that will undoubtedly have consequences for developing countries’ economies. Some believe that these emerging new technologies, also known as frontier technologies, will help us overcome development challenges that we have not, to date, been able to tackle.
However, evidence on how digital technology supports economic growth and poverty reduction is ambiguous. The available evidence does not allow us to conclude that new technologies have significantly contributed, in their own right, to economic growth or poverty reduction.
Furthermore, transferring such technologies to developing countries – and, in particular, fragile and conflict-affected states (FCAS) – remains challenging.
Rather than focusing on the transfer of specific technologies to solve development problems a more broad-based, systemic, approach is needed. Such an ‘innovation systems approach’ is necessary to strengthen the technological capabilities of developing countries like the DRC.
An innovations systems approach
Innovation systems research shows that innovation is complex and systemic. Rather than being solely driven by innovators and firms, innovation is a product of the range of structures – economic, political, and social – in which they are embedded. Entrepreneurs and individuals innovate because they have to. They are not only pressured by competitors, but also by increasingly demanding customers, and the availability of, or access to, equipment.
Hillebrand, Messner, and Meyer-Stamer (1994) argue that the capability to innovate is built on four pillars:
- The skill of producers in imitating and innovating. This is largely dependent on pressure to compete, as well as pressure to collaborate with each other.
- The economic, political, administrative and legal framework conditions that provide incentives to develop technological capability. In the past it was often not recognised that these incentives were lacking in many developing countries.
- Direct support by state institutions or other organisations – to disseminate technical and expert knowledge between different actors and industries.
- Indirect support by the public and private educational systems. In addition to a sound basic education it is important that technical training is available at secondary school and in the universities.
A single firm may, in the short to medium term, manage to get a new technology into the market on its own. However, to sustain its position, it will sooner or later need to tap into the education system, the knowledge networks of intermediaries and technology experts, or supplier networks. It is not enough to have a handful of companies that are able to innovate and explore new technological applications.
A systematic approach to innovation in FCAS
There are a number of additional factors in a FCAS that add complexity and make a ‘systems approach’ even more essential. For instance, sources of information, suppliers or knowledgeable workers may be hard to identify. A lack of adequate market-supporting institutions – to overcome market failures, trust issue and coordination and search costs – can incentivise trade in simpler goods and services. In any case, the costs of coordinating more difficult economic activities are often too high. Without addressing these wider factors it is difficult to establish innovations or new technologies.
How can we strengthen innovation systems?
- Take care when selecting a specific technology. Understand why this uptake has not occurred naturally and what technological capabilities are required to fully leverage, adapt and further deploy the technology. Finally, look at which of these capabilities already exist or must first be developed.
- In contexts that are constrained by severe market and structural failure, technologies that overcome market and government failures should be prioritised, such as those that:
- improve or substitute for a lack of basic physical infrastructure, such as electricity supply, basic education, clean water or adequate healthcare; or
- reduce high coordination costs, or that are unlikely to be adopted by the actors on their own because of high coordination costs.
- Building technological capability could include collaborating with regional and international research groups and universities.
- Instead of only looking sub-nationally for scale consider leveraging regional programmes and organisations like the African Enterprise Challenge Fund. Donors can use their regional presence to broker linkages with equipment and knowledge providers. They can also facilitate access to trade fairs, licences and market access opportunities.
- Finally, but perhaps most importantly, ensure that interventions are adaptive in their approach and have the capability to swiftly assess whether projects are successful and need to be amplified, or are failing and need to be closed down (and learned from).
Disruptive technologies for private sector development in the Democratic Republic of the Congo
Insight into how new technologies should be promoted to support development of the private sector in the DRC.
Marcus will be taking part in a BEAM webinar - Disruptive technologies - an innovations system approach - on Thursday 12 September 2019