The effect of the financial crisis on Africa

The 2010 African Economic Outlook was launched on the 24th of May 2010.  The report states that 80% of economies in Africa still showed economic growth in 2009, compared to 10% of the OECD countries. To see the statistics, head over to their website. You can even manipulate (or interact) with the data for your own research. The best thing is that access to this data is free!

While browsing their site I found an interesting page on the topic of “China in Africa: Debunking myths and debating truths“. The influence of China in Africa is now even a topic at family barbecues, so perhaps this is a good place to gain some new perspectives.

Where does innovation come from? – part 1

I have been asked to share some of my work on innovation. Below is a short piece from a publication that I am working on dealing with innovation systems.

While product and process innovation is better known and often receives the most attention, competitive advantage often emanates from organisational and business model innovations that emerge within societies. Innovation is a powerful explanatory factor behind differences in performance between firms, regions and countries.

According to Fagerberg et al. (2005:4-5), invention is the first occurrence of an idea for a new product or process, while innovation is the first attempt to carry it out in practice. Thus invention and innovation could be closely linked, although in most cases it is separated in time (sometimes decades or centuries), place and organisation. However, the fact that innovation typically emerge within a complex system is often overlooked. For instance, Schumpeter explained that the innovator that invented the steam locomotive still had to wait for others to develop the different aspects of the rail system before the locomotive could be commercially viable. The steam engine was initially invented in a completely different context, again illustrating how inventions are dependent on the context in which it arises.

While many innovations can be linked to well-funded research programmes, this is not always the case. Firms usually innovate because they believe there is a commercial benefit to the effort and costs involved, and this process typically starts by reviewing and re-combining existing production factors (Schumpeter, 1964/1911). Sometimes increased competition, changes in market structure or market demand, or changes in technological performance also affect the innovation process. To turn an invention into an innovation, a firm typically needs to combine several different types of knowledge, capabilities, skills and resources from within the organisation and the external environment. The role of this knowledge and learning interaction will be described in the next sub-chapter. The willingness or interest of an individual in tinkering and exploring better solutions is influenced in part by the organizational context of the innovator, but is also influenced by factors such as education or qualifications, meta-level factors such as culture, personal characteristics (such as patience, inquisitiveness or tolerance of failure) and the institutional environment. Other factors, such as competitive pressure, problem pressure, or social and economic incentives also play a role.

Frequently, policy makers, universities and technological supporting institutions erroneously describe innovation in a linear model that assumes that innovation is applied science. It is assumed to be “linear[1]” because it is believed that there are a series of well-defined stages that innovations go through from research (science), followed by development and finally production and marketing. In this linear model scientific research is deemed to be the most important step as it is the first step in the process. Although there are some cases that followed this path, these are the minority. Very often this line of reasoning is brought by people wanting to justify larger research budgets.

Notes

[1] The “linear” innovation process was first criticized by (Kline & Rosenburg, 1986)

Sources

FAGERBERG, J., MOWERY, D.C. & NELSON, R.R. 2005.  The Oxford handbook of innovation. Oxford ; New York: Oxford University Press.

KLINE, S. & ROSENBURG, N. 1986.  An overview of innovation. In The positive sum strategy: harnessing technology for economic growth. Landau, R. & Rosenburg, N. (Eds.), Washington, DC: National Academies Press, pp. 275-305.

SCHUMPETER, J. 1964/1911.  Theorie der wirtschaftlichen Entwicklung. Eine Untersuchung über Unternehmergewinn, Kapital, Kredit, Zins und den Konjunkturzyklus. Berlin: Duncker und Humblot.


Open data from Worldbank enables development

I know you will immediately point out that the Worldbank already announced on the 20th of April that they will open up access to it developmental data. But then I know that many development practitioners are working so close to the ground that data from the Worldbank may seem to be very far from the problems in rural economies.

But….

I think it is time that we stand back a little. Perhaps it is time to ask some old questions in new ways. And then to look at the data to see if it supports our logic.

For instance, why are development practitioners trying to stimulate “growth” in rural areas? Can you even remember why? Or maybe ask “what happened to wealth and prosperity?”.

Is building wealth in Africa still important to us? Or are we now all working on poverty alleviation?I. I think we all know that we have to find ways to stimulate local capital accumulation, savings and investment in Africa. But is this possible if we all work on rural development?

Please do not read anything into these questions, other that I sometimes get the feeling that we have forgotten what we are working for. And the more I play with the data from the Worldbank and Gapminder, the more I wonder if we are perhaps pushing the rope rather than pulling it.

Back to the data. Take a look at a report about the opportunities offered by better data according to some experts (Hans Rosling and Beth Noveck).  The data is now presented at a new website of the Worldbank. Hans Rosling is better known for Gapminder, a site that you should definitely look at for its innovative visual presentations of data.

To me it seems that we should be supporting the more advanced sectors in Africa. We should be asking questions about stimulating innovation, private sector development, and economic growth in the cities. We’ve known for more than 100 years already that cities play an important role in economic growth and prosperity of nations. That is why I bet that you prefer to live in a city if you are a knowledge worker! It makes me wonder why so many development practitioners seem to want to keep people in the rural areas…..

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