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Analyse Economique
In my first short working paper (‘Innovation, competition and IP in developing countries: convergence or customization?’) I questioned whether the globalization of competition and IP laws was pushing developing countries in the sense of convergence, and whether this tendency was beneficial for these countries’ quest for innovation. I also posed five guiding questions and invited the reader to think about the trichotomy ‘innovation/IP/competition laws’ in the context of developing countries. This second post addresses the first question and the point of departure of this analysis:
What is innovation?
A mere definition of ‘innovation’ does not provide a satisfactory answer to this question. Therefore, I will also discuss a number of topics and try to provoke further discussion on (i) the concept of innovation, (ii) the context-specificity of the concept; (iii) and some key drivers of innovation in developing countries.
Let’s ‘begin at the beginning’ and ‘go till we come to the end:[1] the ‘innovation’ that should be stimulated or safeguarded by competition or IP laws (or both) in African countries.
(i) Innovation: what’s in a name?
In the legal literature, ‘innovation’ is often imprecisely associated with the development of ‘something significantly new’:[2] what ‘does something new’ mean? New to whom? How new is new enough? ‘Innovation’ should be distinguished from ‘invention’: the conception of a new idea, a discovery or a unique finding.[3] A genius idea or a cutting-edge invention cannot be automatically qualified as ‘innovations’ before they are introduced in the marketplace. In simple terms, innovation is the ‘process of putting ideas into useful form and bringing them to the market’.[4] The innovator is the one that successfully manages to successfully concretize an idea, commercialize it, or in the case of social innovation, externalize it to society. The innovative ideas included in the concept of ‘innovation’ refer to new products, processes, services and public policies, which may have either a commercial goal or simply an altruistic aim to solve social problems. The core element of the concept of ‘innovation’ I would like to point out is therefore (a) thesuccessful externalization and concretization of ideas. However, an innovation must also be the (b) first concretization of these ideas.
(ii) Innovation: a context-specific concept?
How can we measure the newness element of innovation? Must this be the first externalization ever of a new idea translated into the commercialization of a new product? From an IP rationale, the answer would be yes: the first ever. However, we should ask ourselves whether this makes sense in Africa. Is the concept of ‘innovation’ context-specific? Is it in the ‘eye of the beholder’? Can we really expect poor countries to develop cutting-edge technology while their R&D spending is limited? We surely want to stimulate and safeguard the same type of innovation present in developed countries, but from a policy point of view, is this realistic?
Innovation as a relative concept?
According to Srinivas/Schutz, innovation is contextual/sector-specific, i.e., innovation depends on the socioeconomic conditions it is embedded in and should therefore ‘meet the needs of the most people, especially in countries where innovation and poverty reside side by side’.[5] If we reflect upon this topic from the perspective of the stimulation and diffusion of the ‘innovation spirit’ and good innovation policies to African countries, we might want to adopt a less strict concept of innovation and content ourselves with a relative concept of innovation for these developing countries.
Inspired in the literature on policy diffusion, we might perhaps want to perceive innovation here as something that ‘it is new to the states adopting it, no matter how old the program may be or how many other states have adopted it’.[6] The facilitation of innovation in a different context might still pose important challenges to a developing country even if it has been implemented elsewhere. According to this perspective, the ‘newness’ of the innovation in question is not assessed in absolute terms but related to the experience and knowledge of the jurisdiction in question. This may mean that African innovators are allowed to stand in the shoulders of other innovators, ‘imitate them’ (?) and concretize their ideas within a circumscribed territory. This is perhaps easily applicable to innovative programs or policies, but should African countries not be stimulated to develop innovative products with their own resources and adapted to their local characteristics, even if they are similar to existing products in developed countries? (Potential IP concerns shall be discussed a few weeks in one of my next posts) While this less ambitious perspective of innovation takes into account the socioeconomic conditions of developing countries, it almost goes against the globalization trend that is fighting for convergences of laws and policies. In addition, a relative concept of innovation opens the door to free-riding and may not give incentives to the development of truly innovative products and processes.
Leaving IP and other legal concerns aside for now, I would like to introduce briefly some of the relevant incentives or favorable conditions to the emergence of innovation.
(iii) The drivers of innovation
Ashford/Hall argue that innovation is determined by three decisive factors that should be present at the firm and governmental levels: (a) willingness to innovate; (b) opportunity/motivation to do so; and (c) capacity to innovate.[7] I would like to mention an additional external driver: competition.
(a) Willingness to innovate refers to how firms and individuals perceive changes in production, understand technological or social problems, develop and assess alternative solutions for it. While this ambition may easily be found in developed countries, underdevelopment, limited capacity of higher education, and profound scarcity may affect this willingness to innovate.
(b) Opportunity and (c) capacity to innovation are influenced by external factors, including the regulatory conditions faced by firms. Ashford has claimed that regulation, by taking these elements into account, can create ‘an atmosphere conducive to innovation’.[8] Innovators in African countries face however here significant hurdles. Although governments are aware of the need to enhance their R&D spending, they still have not been able to find the adequate mix of regulatory instruments that can create a sound regulatory environment for innovation.[9]
(d) Competition: in simplistic terms, it is often argued that competition drives innovators because companies feel, on the one hand, the
pressure to be more cost-efficient notably through the development of innovative production processes; on the other, to stand out of the crowd of competitors, differentiating their products from the existing ones and offering consumers innovative and better products. Innovative companies are those that leave their comfort zone and strive for better products and processes. However, leaving your comfort zone implies taking risks that developing countries might not be willing to embrace. Although ‘necessity is the mother of invention’, innovators in African countries might need a helping hand from their governments to solve the ‘innovation chasm’ that often characterizes them.[10] This ‘innovation chasm’ is currently affecting these last three drivers of innovation. Can law—particularly Antitrust & Competition laws—play a role here? Can laws provide wings to African innovators to fly in the direction of innovation? Or will innovators feel imprisoned and palsied by these giant wings?[11]
Read the first part here.
An article by Sofia Ranchordas (Tilburg University, School of Law) initially published on our partner's website ATT.
[2] Stefan Müller, ‘Innovationsrecht—Konturen einer Rechtsmaterie’ (2013) 2 Innovations- und Technikrecht 58, 60.
[3] Joseph Schumpeter, Capitalism, Socialism and Democracy (first published in 1939, Harper, 1942) Luke A. Stewart, ‘The Impact of Regulation on Innovation in the United States: A Cross-Industry Literature Review’, Information Technology & Innovation Foundation, 2010, paper commissioned by the Institute of Medicine Committee on Patient Safety and Health IT, available at www.iom.edu, 1.
[4] Eugene Fitzgerald; Andreas Wankerl; Carl J. Schramm, Inside Real Innovation: How the Right Approach Can Move Ideas from R&D to Market and Get The Economy Moving(Kauffman Foundation, World Scientific Publishing 2011) 2.
[5] Smita Srinivas, Judith Schutz, ‘Developing Countries and Innovation: Searching for a New Analytical Approach’ (2008) 30 Technology in Society 129.
[6] Jack L. Walker, ‘The Diffusion of Innovations among the American States’ (1969) 63(3)The American Political Science Review 880, 881.
[7] Nicholas A. Ashford; Ralph P. Hall, ‘The Importance of Regulation-Induced Innovation for Sustainable Development’ (2011) 3 Sustainability 270, 279.
[8] Nicholas A. Ashford; Christine Ayers; Robert F. Stone, ‘Using Regulation to Change the Market For Innovation’ (1985) 9 Harvard Environmental Law Review419, 422.
[9] See, for example, the Report by the SA Department of Science and Technology, ‘A knowledge-based economy. A ten-year plan for South Africa (2008-2018)’ available at http://www.esastap.org.za/download/sa_ten_year_innovation_plan.pdf
[10] Department of Science and Technology, ‘A knowledge-based economy. A ten-year plan for South Africa (2008-2018)’ available athttp://www.esastap.org.za/download/sa_ten_year_innovation_plan.pdf
[11] Inspired in the English translation of ‘L’ albatros’ by Charles Baudelaire (Les Fleurs du Mal), by Jacques Le Jacques LeClercq, Flowers of Evil (Mt Vernon, NY: Peter Pauper Press, 1958). The original verse is ‘Le Poète est semblable au prince de nuées (…) ses ailes de géant l´empêchent de marcher’.
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