Innovating for Growth, Innovating for the Environment

The paper first analyses the process of innovation beginning with R&D. Most innovation is focused on the developed world. and developing countries face problems in adapting it to local conditions, problems which are likely to increase as technology becomes more complex and sophisticated. In this they may be better served by innovation coming out of China and India. Knowledge diffusion could be facilitated by universities and multinationals, but neither are fulfilling their potential in this respect. In addition the argument can be made that too much R&D targeted specifically at low income countries is focused on agriculture, health and the poor and not enough on manufacturing and service industries. The entrepreneur is central to the process of innovation and in developing countries faces problems due to skill shortages, a shortage of finance, corruption, anti-competitive policies and unhelpful cultural attitudes. The paper then looks at the role of innovation in facilitating a revolution in the way we produce and use energy. There is something of a disconnect between this literature and that on innovation per se, with it tending to focus on the relative merits of R&D and demand policies in driving through change. This is ̳policy driven‘ innovation, possibly the first example of its kind certainly on this scale, rather than ̳profit driven‘ innovation. Hitherto major, breakthrough innovations have forged a revolution in economic activity. Here the order is reversed, we know the revolution we need to engineer, we ̳simply need‘ the appropriate innovations. What is more this is a revolution being driven by a series of incremental innovations and there must be doubts as to how far it can succeed. It will undoubtedly bring major benefits to some, e.g. rural communities and those geographically well placed to exploit natural power sources. But cutting carbon emissions, even with the aid of new technology, may still mean cutting global economic growth. This paper is heavily based on a project done for DFID in the UK: Scoping Study on Economic Growth, Technological Diffusion, and Low Carbon Investment, 2010, John Hudson and John Sawdon