Inclusive innovation: an architecture for policy development

TLDR

Over the past two decades, economic growth has increasingly diverged from social and economic development, leaving large numbers of people in absolute poverty—especially outside China and in Africa—while the scale, capital intensity, and environmental impact of innovation have contributed to this uncoupling. This paper aims to clarify the definition, nature, and dynamics of inclusive innovation as a means to address exclusion and promote more equitable development. It proposes that inclusive innovation should be framed within a holistic innovation cycle, distinguishing process from product innovation and recognizing the poor as both producers and consumers, while noting growing private sector and global fund engagement and the influence of growth trajectories on linking the absolute poor to those with discretionary incomes. The authors conclude that a balanced, holistic approach to inclusive innovation, adopted by diverse stakeholders, is essential for effectively reallocating resources to recouple economic growth with development.

Abstract

The past two decades have been characterized by an increasing uncoupling of economic growth and social and economic development. Outside of China, the numbers living in absolute poverty have remained stubbornly large; in Africa, they have increased substantially. Although this uncoupling has multiple sources, the trajectory of innovation (large in scale, capital intensive in nature and destructive of the environment) has contributed to these outcomes. Reorienting towards a more 'inclusive innovation' path has an important role to play in overcoming exclusion. However, we have only a weak understanding of the definition, nature and dynamics of inclusive innovation, and this paper seeks to fill this conceptual gap. It argues that inclusive innovation needs to be understood and developed in the context of a holistic conception of the innovation cycle, the distinction between process and product innovation and the roles played by the poor as both producers and consumer. It further charts the growing interest of private sector actors in inclusive innovation (including, but not confined to transnational corporations seeking the 'fortune at the bottom of the pyramid') and large global funds working in tandem with the private sector and governments. Consideration is also given to the role which growth trajectories play in determining the direction of innovation and in promoting linkages between the globally absolute poor (incomes below $1pd) and those with discretionary cash incomes living in the margins above $1pd. The paper concludes with a call for a more holistic and balanced approach to inclusive innovation to be adopted by a range of stakeholders so that resources are deployed most effectively to aid the recoupling of growth and development.