Innovation for Inclusive Development Program Prospectus for 2011-2016

Innovation for Inclusive Development

Program Prospectus for 2011-2016

Public Version

Program and Partnership Branch
International Development Research Centre

October 2011

Innovation for Inclusive Development Program Prospectus for 2011-2016

Table of Contents

LIST OF ACRONYMS ............................................................................................................................................... II
EXECUTIVE SUMMARY .......................................................................................................................................... III
1. CONTEXT AND BACKGROUND....................................................................................................................... 1
A. DEVELOPMENT CHALLENGE AND SITUATIONAL ANALYSIS .............................................................................................1
B. ABOUT THE PROGRAM ...........................................................................................................................................6
2. APPROACH TO PROGRAMMING ................................................................................................................... 8
A. PROGRAM GOAL ..................................................................................................................................................8
B. PROGRAM OUTCOMES ..........................................................................................................................................8
3. PROGRAM STRATEGY ................................................................................................................................. 11
4. REGIONAL AND THEMATIC PRIORITIES ....................................................................................................... 13
5. CONCLUDING COMMENTS .......................................................................................................................... 16
6. REFERENCES ............................................................................................................................................... 17

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List of Acronyms

AFS Agriculture and Food Security

BRICS Brazil, Russia, India, China, South Africa

GDP Gross Domestic Product

GLOBELICS The Global Network for the Economics of Learning, Innovation, and Competence
Building Systems

GRIID Group for Research on Innovation for Inclusive Development

iBoP Innovation for the Base of the Pyramid

ICT4D Information & Communication Technologies for Development

IDRC International Development Research Centre

IID Innovation for Inclusive Development

ILO International Labour Organization

ITS Innovation, Technology and Society Program (2006-2011)

LAC Latin America and the Caribbean

MDGs Millennium Development Goals

MENA Middle East and North Africa

MSMEs Micro, small and medium-sized enterprises

NGO Non-Governmental Organization

OECD Organization for Economic Co-operation and Development

R&D Research and Development

RoKS Research on Knowledge Systems

S&T Science and Technology

STI Science Technology and Innovation

UNCTAD United Nations Conference on Trade and Development

UNDP United Nations Development Program

UNESCO United Nations Educational, Scientific and Cultural Organization

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Executive Summary

Over the past two decades, economic growth in many developing countries’ has been
spurred by substantial investment in science, technology and innovation (STI). This
investment has enabled these countries to graduate to middle income status by
increasing their competitiveness, growth, and wealth. Yet, it has also resulted in greater
internal inequality and multi-dimensional poverty— a billion of the world’s poorest
people now live in middle income countries.

While STI can contribute to poverty alleviation and wealth creation, innovations that
emerge in the formal sector rarely address the needs of the poor. At the same time, a
significant number of innovative activities take place in the growing informal sectors in
developing countries. But growth-oriented approaches to STI fail to encourage or
support these activities and so the impact tends to be marginal. Systemically studying
innovation in informal settings is crucial to understanding how to transform marginal
innovative activities into sustainable innovations that have wider impacts and stronger
links with the formal sector.

The field of innovation studies has proven useful to better understand how OECD
countries and emerging ones such as South Korea and China have achieved
competitiveness and growth. It illustrates that innovation depends upon dynamic
interactions among actors such as firms, government agencies, universities, and
science granting councils, that result in systemic learning and capacity building. This
makes the understanding of knowledge flows for innovation important and raises
questions of system failures in developing economies where not all of the relevant
actors are well developed and connected. Likewise, the characteristics of informal
actors, the interactions, and the learning processes that take place among them, can
differ dramatically from those in the formal sector.

This program will also contribute to the emerging field of Innovation for Inclusive
Development by supporting research that merges the fields of innovation studies and
development studies. It will support the development of new frameworks, methodologies
and metrics for studying informal sector innovations. IID’s goal is to enable greater
understanding of how innovation in the informal sector can improve livelihoods and
contribute to inclusive development. It will place particular focus on the role of women
and intermediaries that bridge informal and formal sectors, in activities essential to
livelihoods, such as natural resources, services, and cultural industries. IID’s intended
outcomes include low- and middle-income country universities conducting research on
innovation for inclusive development, science granting councils funding research in this
area, and governments developing enabling policies that encourage and support
innovation for inclusive development.

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1. Context and Background

a. Development Challenge and Situational Analysis

Over the past two decades, economic growth in a number of developing countries has
been spurred by substantial investment in science, technology and innovation (STI)
(UNESCO, 2010), enabling several developing countries to graduate to middle income
status. Despite this progress, inequalities and multi-dimensional poverty1 have
worsened—a billion of the world’s poorest people now live in middle income countries
(Summers, 2010) (Figure 1).

STI can genuinely alleviate poverty. Cellphones have had a notable impact in banking,
agriculture, and health.
Social innovations such as
micro-credit have also
reduced poverty. But
striking examples that
have had a widespread
impact are few. The
benefits of innovations
emerging in the formal
sector rarely address the
needs of the poor because
most STI policies are
aimed at achieving
economic growth and
competitiveness and not at
reducing poverty
(Cassiolato, et al., 2008;
Kaplinsky, 2010; STEP
Centre, 2010). At the same
time, an enormous amount
of innovative activity takes
place in the informal sector
in developing countries,
such as innovative waste
Figure 1 Population living in middle income countries on less than
management approaches, US$1.25 a day (in millions)
construction methods, Source: The Guardian www.guardian.com.uk/global-development, found at “The New
Bottom Billion and the MDGs—A Plan of Action”, IDS in Focus policy briefing, October
vehicle maintenance, 2010.
cellphone repairs and
distribution, or ways of producing energy. But growth-oriented approaches to STI fail to

1
The number of people living in multi-dimensional poverty – an acute deprivation of basic human needs in health,
education, and standard of living – is estimated to be 1.75 billion, exceeding the number of people whose poverty is
estimated by the $1.25 income a day measurement. (UNDP, 2010)

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measure, encourage, or support these activities and so the impact of most tends to be
marginal.

The field of innovation studies has proven useful in emerging and developed countries.
There is a correlation between a country’s overall economic performance and the
functioning of its national innovation system. Innovation studies have been used, for
example, to better understand how countries such as Korea and China have achieved
competitiveness and economic growth by strengthening systemic linkages and
interactions among multiple actors. The innovation systems framework is important
because it illustrates that innovation is not a linear process whereby research and
development (R&D) leads to commercialization, industrialization, and growth. Instead, it
illustrates that what is most important are the dynamic linkages and interactions that
take place among actors such as firms, government departments, universities, and
science granting councils, that result in systemic learning, the distribution of knowledge
throughout the system and lead to strengthening of capabilities (Lundvall et al., 2009).

A finding common to both developed and developing countries, but more prevalent in
the latter, is that there are more firms that innovate than do R&D. Taking a systemic
approach to studying innovation, notably in informal settings, is crucial to understanding
how to transform marginal innovative activities into innovations that are sustainable and
have wider impact to include those people that are usually left out from the benefits of
formal sector innovations. Understanding of knowledge flows for innovation is pertinent;
it raises questions of system failures in
developing economies where not all of the Box 1 - Informal services sector
actors are well connected. Learning "Suame Magazine" is Ghana's largest
capabilities are weakened by constrained informal industrial area and among the
opportunities to apply local knowledge to the largest in Africa. About 12,000 mostly
solution of local development problems informal vehicle repairs and metal works
MSMEs conduct business there. Several
(Box 1).
innovation activities making use of
available materials and creating products
Evidence from earlier IDRC’s Innovation,
to suit local needs, are hindered by poor
Technology and Society (ITS) projects (2006-
infrastructure; lack of computer-based
2011) demonstrate that formal STI policies
business solutions or modern machine
insufficiently address the informal sector, or
shop practices; and inconsistent energy
worse, completely ignore it. For example, in
supply. A major challenge is meeting the
China, industrial decentralization to diversify
quality expectations of customers in the
rural incomes failed to impact local formal sector; gaining access to markets
economies in the mountainous coastal areas and capital and financial services; facing
of China because of weak innovation system health and safety risks; and lack of secure
linkages. In fact, the research showed that the land tenure. Further research is needed to
formal innovation processes not only did not understand how support innovations in this
help the poor in this region, but led to greater informal industrial area better link it to the
exclusion. Another study of three rural Indian formal sector, to enable a local,
clusters found that a lack of intermediaries sustainable, Ghanaian vehicle repair
resulted in informal rural enterprises in industry.
textiles, footwear, and terracotta pottery

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unable to leverage government support for technology development, business
infrastructure, and access to credit or markets. The missing links between public
policies and the informal sector underscore the important intermediating roles that local
and developmental agencies can play. These include helping small informal enterprises
access scientific and technical knowledge and technology, find specialised markets, and
overcome policy bottlenecks.

While there are many challenges to bridging the informal and formal sectors, examples
of innovative activities in the informal sector that are linked to the formal sector do exist.
For example, an ICT4D project in West Africa showed that dynamic and highly adaptive
practices occur in the informal sector in the area of telecommunication service delivery
for urban and peri-urban households. The liberalization of the telecommunication sector
in three countries enabled actors to ingeniously develop tools to repair and adapt any
mobile phone as well as regularly innovate in delivering services on the basis of cultural
customs and revenues from clients. Most of the services developed by telecom
operators to address low income populations’ needs were influenced by informal actors’
innovations, which has resulted in new jobs and sources of income for youth in these
countries. An IID project is now using this past ICT4D project as a case study for the
development of indicators for innovation in Africa.

In improving our understanding of the dynamics of learning and innovation processes,
one has to acknowledge that there are still some knowledge gaps on what comprises
innovation in the informal economy. Even beyond the informal sector, “innovation” has
many meanings. A broad definition is converting knowledge to value. In business terms,
“value” means “commercial” value. In other words, a true innovation is something novel,
to the firm, to the sector, or to the world, such as a product, a process, or a way of
organizing, that connects to the market.2 In a development context however, innovation
is expected to contribute to improving people’s lives. Thus, while improving financial
assets is one important dimension, other objectives include multi-dimensional poverty
alleviation, such as empowering marginalized groups. Moreover, social innovations, or
adaptations are as important as technical ones. In fact, while social innovations, such as
participatory budgeting processes, may thrive with little technical input, the reverse is
not true. Technical innovations such as improved water pumps depend on social
adaptation to genuinely improve people’s lives.

Given the myriad of definitions of innovation, one of the program’s goals will be to assist
in developing a common understanding of the processes and outcomes that can be
described as innovation in the informal sector. IID will thus, at its outset, adopt a broad
definition of innovation that can be refined: processes that improve people’s lives by
transforming knowledge into new or improved ways of doing things in a place where or
(by people for whom) they have not been used before.

2
www.oecd.org/dataoecd/35/61/2367580.pdf

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Re-conceptualizing innovation studies to investigate how to add value to innovative
activities taking place in the informal sector is critical because the livelihoods of so many
low income people in developing countries depend on informal economic activities. For
example, the estimated contribution of the informal sector to GDP is 29% in Latin
America, between 27% - 41% in Africa, and 41% in Asia (Floodman Becker, 2004).
Transforming marginal innovative activities into sustainable innovations with wider
impact by strengthening links between the informal and the formal sector could greatly
improve productivity and improve people’s lives.

Informality and livelihoods: From its earliest observations, the informal sector was
described as people seeking income opportunities through self-employment because of
their exclusion from formal wage employment (Hart, 1973) and usually for more than
mere subsistence (Portes & Haller, 2005). The term garnered a negative connotation
when the ILO equated informality with poverty in urban contexts and framed it to be
synonymous with low levels of skill, capital, and organization; family ownership of
enterprises; or small scale operations where labour-intensive production was based on
out-dated technology and where unregulated and competitive markets resulted in low
levels of productivity and savings (ILO, 2002).

These negative notions of informality are being challenged as some researchers now
see the informal sector as a “seedbed” for entrepreneurial dynamism rather than a
hindrance to development (Losby, et al., 2003; Williams, 2007). Others have described
how people use the informal system to recover some economic power, particularly in
highly centralized countries, to avoid institutional rules or because they are denied
protection by these rules and institutions (Feige, 1990). Therefore, “street-sellers in the
Dominican Republic and Somalia, through to informal garment businesses in India and
the Philippines, to home-based microenterprises in Mexico and Martinique” (Williams
2007, p. 121) become the foci for enterprise and entrepreneurship potential, creativity,
dynamism, and innovation (ILO, 2002b). Moreover, UNDP research suggests that in
developing countries the informal sector is taking the lead in innovation as opposed to
multinational firms.

Based on a reconfigured understanding of the informal sector and its important role in
the developing world, the IID program will support research that examines how these
informal activities can become more effective and efficient, specifically focusing on the
ways they can lead to improved livelihoods and eventually inclusive development.
Livelihood can simply refer to a source of income in its most narrow definition. But it
becomes a broader concept within the “Sustainable Livelihoods” (SL) Framework where
it is comprised of the capabilities, assets (including both material and social resources),
and activities required for a means of living (Chambers & Conway, 1992). Not being
poor means that people can sustain and enhance these capabilities and assets, and
cope with and recover from various stresses and shocks (Schilderman, 2002). Inclusive
development is understood here as development that reduces poverty and enables all
groups of people to contribute to creating opportunities, sharing the benefits of
development, and participating in decision-making.

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IID’s research will be organized around three Box 2 - Innovating with local
themes: the role of women in informal sector intermediaries
innovation; intermediaries that bridge informal IDRC’s iBoP Asia project shows that
and formal sectors; and activities essential to interactions between communities and
intermediaries are pivotal to innovations that
livelihoods in the informal sector. improve livelihoods of poor people:
In the Philippines, the intermediary -- a
Women: Particular attention will be placed on social microenterprise -- worked with a
women because they constitute two-thirds of network of “sari-sari” stores and enabled
the informal sector producers and traders; women entrepreneurs to adopt a new
business model to legally include
yet, their interactions with technological and affordable generic drugs in their product
scientific knowledge and practices are often range.
unrecognized. In fact, after decades of STI for In Cambodia, a local NGO became a
development, women’s positions and ‘technology intermediary” for floating
livelihoods in their communities have declined poor communities to develop the world’s
in comparison to men (Huyer, 2004). IID will first community-based human waste
treatment barge.
support research that examines women’s In Vietnam, a more formal actor, the
roles as informal sector innovators and Center for Marine Conservation and
entrepreneurs as well as how informal sector Development, assisted coastal
innovations specifically impact women’s communities to improve their informal
livelihoods. eco-tourism services.
In the Philippines, the Jeepney
cooperative of taxi operators
Intermediaries: Within the formal innovation intermediated between a research and
system, intermediaries are seen as bridging training centre, the local government
agents between firms that help them and a fast food chain, to enable fuel
commercialize, scale up and diffuse cost savings by converting waste
cooking oil into biodiesel.
innovations (Howells, 2006). In the context of
the informal sector, recent case studies
indicate that similar players help informal
enterprises find new technologies, products, markets, and even overcome many
bottlenecks (Box 2); yet understanding of these informal intermediaries’ roles and
potentials to take innovations to scale, remain limited in developing countries.

Informal sector activities: Research will focus on activities important to livelihoods in
informal settings, including natural resources, services, and cultural industries.
Examples of natural resources-based industries include mining and fishing and
production of medicines, cosmetics, furniture, and biofuels. Services include
transportation, vehicle maintenance, construction, and waste management and reuse.
Cultural industries include crafts, art, design, as well as ecological and cultural tourism.

In summary, to examine these issues, IID will support interdisciplinary research that
seeks to understand the underpinnings of innovative activities in the informal sector. It
will also examine ways in which informal enterprises respond to, interact with, and
influence existing social, economic, and policy structures as well as bottlenecks in
developing countries. IID-supported research will focus on how informal enterprises
build capacities to generate sustainable livelihoods and engage strategically with, for
example, other enterprises (formal or informal), financial service providers, government

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agencies, development practitioners, and communities. These interactions help informal
enterprises identify specific demands for affordable and niche goods and services,
enhance their resource base, overcome bottlenecks, mitigate risks, and improve
business and investment opportunities through innovation.

b. About the program

The IID program will support the development of research tools and methods, case
study syntheses, and analyses of innovation by and with the informal sector.

Program choices: The program will not support top-down research on innovations for
the poor, without their involvement. The IID program will also not support research on
innovation for food production as the Centre’s program on Agriculture and Food
Security (AFS) is already working in this area. There is however complementarity with
AFS on issues relating to innovation in natural resources-based livelihoods as well as
on informality with the Centre program on Supporting Inclusive Growth (SIG). IID will
pursue Intra-IDRC collaboration with both these programs where there are obvious
opportunities for synergy.

Field building: IDRC has a long standing legacy in field building. For example, it has
constructed the field of Ecohealth by bringing together the fields of environmental
studies and public health as well as constructed the field of ICTs for Development
(ICT4D) by bringing together the fields of soft- and hard-ware engineering and
development studies. The development of the IID field, which will bring together the
research fields of innovation studies and development studies, will be supported by and
also contribute to Centre learning in the area of field building.

Building on strengths: The field of IID is emerging from the Centre’s continued
commitment to S&T, which goes back to its very early days of supporting science and
technology policy reviews in several developing countries (Box 3). It also builds on two
exploratory activities: In 2001, Research on Knowledge Systems (RoKS) explored the
ways in which knowledge is produced, communicated, and applied to development
problems, and investigated the policy and institutional frameworks that govern this
process. The 2003 Task Force on Biotechnology and Emerging Technologies shared a
similar focus as it reviewed the most controversial applications of biotechnology and
nanotechnology related to poverty alleviation.

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Box 3: The Past Decade and Future of S&T Programing at IDRC

2001-2006 2006-2011 2011-2016
The Exploration Years Emergence of the Field Building a new field

•Research on Knowledge Systems •Innovation, Technology and •Innovation for Inclusive
(RoKS) –Explored ways in which Society (ITS) – Built on RoKS and Development (IID) – a new field
knowledge is produced, New Technologies projects while where innovation systems and
communicated and applied to creating its own portfolio under three development studies converge to
development problems and the policy pillars: contribute to inclusive development.
and institutional frameworks that innovation systems actors,
govern this process. science and technology IID will transition projects focused on
policies, science and technology policy
•Task Force on Biotechnology and impacts and inclusion of reviews and emerging technologies.
Emerging Technologies – To review transformative technologies.
biotechnology applications as they
relate to food security, agriculture and
poverty alleviation. Later it expanded
to nanotechnology and converging
technologies.

After several years of not having a dedicated Centre program on STI, a new program on
Innovation, Technology and Society (ITS), building on RoKS and the New Technologies
Task Force, was approved in 2006. ITS culminated past learning by integrating new
understandings about the more complex nature of the processes behind STI as well as
the realization that innovation in developing countries means more than R&D and
crosses over the exclusive boundaries of laboratories and firms.

Several ITS-funded projects revealed the program’s strength and the potential focus on
innovation in the informal sector. They helped to raise the issue on the broader research
agenda. Partly a result of ITS projects, the Indonesian Science Granting Council is
incorporating the links between innovation and poverty alleviation in its strategic plan
and the Chinese State Council for Higher Education has approved the establishment of
a PhD program on grassroots innovation at Tianjin University. In Latin America, IDRC-
supported researchers investigating “social technologies” were asked to design
specialized courses and convene ministerial round-tables. The closing workshop of the
“Innovation at the Base of the Pyramid” project brought together 30 participants
representing national science granting councils and universities in Southeast Asian
countries who are interested in moving to a second phase—a promising sign that formal
actors are interested in fostering innovations with and by the informal sector. A project
on building capacity in STI indicators has resulted in the publication of two books that
are now being used to train researchers in the development of indicators to measure
innovation in the informal sector in Africa. The program also funded a joint OECD–
UNESCO workshop that brought together innovation and development scholars and
resulted in the book, Innovation for Development: Converting Knowledge to Value
(Kramer-Mbula & Wamae, 2010).

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Consistent with the themes outlined in the 2010-2015 Strategic Framework for STI
programming, universities and science granting councils will figure prominently in IID.
The program will support research by, and on, universities, and build their capacity to
“cross the street” and examine innovation in the informal sector as a means to lead to
inclusive development. IID will introduce science granting councils to the premise of
innovation for inclusive development as a sensitizing concept (Patton, 2010). These
capacity building projects will encourage them to increase their support for innovation in
the informal sector in order to alleviate poverty and inequality.

An analysis of the development context and knowledge gaps suggests that IDRC’s
niche in STI is innovation for inclusive development. This is an emerging area of
strength for the program. An external consultation with STI experts revealed that they
saw real promise in IDRC focussing on innovation that alleviates poverty and funding
research that demonstrates the links between these areas and the formal STI sector.
A donor scan and consultation further confirmed this niche. Few other donors provide
funding in the area of innovation for poverty alleviation and fewer still support research
that systemically addresses interactions, joint learning, and capability building among
important actors that bridge the informal and formal sectors.

2. Approach to Programming

a. Program Goal

IID’s goal is to enable greater understanding of how innovation in the informal sector
can improve livelihoods and contribute to inclusive development. The program will strive
to produce evidence that will influence actors in the formal innovation system, such as
universities, science granting councils, policy makers, firms, and intermediaries, to
broaden their perspectives in order to create policy instruments and processes that help
transform marginal innovative activities in the informal sector into sustainable
innovations that have wider impact and stronger links with the formal sector.

b. Program Outcomes

The program has three inter-related key outcomes—capacity building, knowledge
generation, and research use.

Capacity Building: Innovation for Inclusive Development is an emerging field of
research that is currently composed of two separate bodies of research—innovation
studies and development studies. Researchers in these two fields are currently working
in isolation; therefore, a key goal of IID programming will be to build researcher capacity
in this new field of research. In order to build a field of research, researchers will need to
construct its language and concepts. The development of these tools and research
methods will signal the field’s progress, particularly once a critical mass of researchers
begin to use these tools and methods to study the ways in which innovation leads to
improved livelihoods and inclusive development.

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Knowledge Generation: Generating knowledge about how innovations in the informal
sector can lead to inclusive development through improved livelihoods will encompass
two main areas: The first area is around IID’s entry points of women and intermediaries,
including the role of women as entrepreneurs. It deals with the impacts of innovation on
women; the role of intermediaries in addressing bottlenecks; and their role in facilitating
linkages with the formal sector. The second area in which the program will generate
knowledge is innovation in activities essential to livelihoods in the informal sector
including natural resources, services, and cultural industries. The production of credible,
objective, evidence will be crucial to influence policies that encourage formal sector
actors to support innovation in informal sector settings.

Research use and Policy Influence: Both during and following the process of
generating knowledge, the program will strengthen research recipient capacity to
interact with policy makers. For instance, in the project to strengthen capacities of
universities and science granting councils in South East Asia, the program will work to
influence science granting councils in four countries to explicitly include innovation for
inclusive development in their strategic plans and implement follow-up research funding
strategies with universities in the region. Researchers will also interact with UNESCO
and the OECD because these organizations are interested in better conceptualizing and
measuring innovation in the informal sector. IID will also support recipients to
communicate how improving livelihoods through innovation in the informal sector is
might enhance global governance in post MDG framework debates.

Table 1 presents, in a graduated way, the baseline as well as examples of minimum,
medium, and high outcomes that IID could achieve. The baseline gives a sense of the
field at the time of starting the prospectus. Program success depends on a longer-term
strategy; however, some small successes might be possible depending on contexts. A
key goal in building this new research field is to support the development of an evolving
global network of researchers but whose members are from both developed and
developing countries. To achieve this goal, the program will develop an explicit strategy
to support the development of leadership in the South.

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Table 1: Summary of Expected Program Outcomes
Baseline Minimum Medium High
Researchers A global research A set of new Working through
struggle in isolation network is formed and frameworks, international and local
to find common starts developing methodologies and partnerships, IID
language, concepts common language metrics for studying researchers lead the
and principles for and methodologies for informal sector development of a set
Capacity building and field building

research on research on informal innovations are of new frameworks,
innovation for sector innovations developed. This will methodologies and
inclusive involve collaboration metrics for studying
development Science granting with international informal sector
councils, universities organizations such as innovations
Science granting and intermediaries UNESCO and the
councils and begin participating in OECD. National science
intermediaries are activities that granting councils and
unaware of or do incorporate innovation universities
not appreciate IID studies and incorporate IID into
concept and its role development studies their research funding
and teaching agendas
Developing country Research leads to Research on how Rigorous synthesis of
Knowledge generation

researchers ignore context-specific innovations in the research reveals
or are unaware of understanding of how informal sector lead to findings on how
innovations in the innovations and sustainable livelihoods innovations and the
informal sector and intermediaries in the and the role of role of intermediaries
how they can informal sector affect intermediaries is in the informal sector
contribute to sustainable livelihoods published and cited by affect sustainable
sustainable peers livelihoods
livelihoods
Policy and decision IID researchers inform Policy/decision National, regional and
makers and formal local policies and makers and international policies
sector practices with context- intermediaries request and regulations on
intermediaries are specific evidence on IID researchers to innovation in the
unaware or dismiss what constrains inform policies and informal sector are
Research use and policy influence

the importance of informal sector practices. For influenced by
informal sector innovations example being invited evidence from
innovations to STI round tables context-specific and
and the development synthetic research.
of STI plans
Intermediaries help
innovations in the
informal sector go to
scale based on
research from context-
specific and/or
synthetic research.

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3. Program Strategy

Strategies for helping to build the IID field, transition particular ITS activities, and
address cross-cutting issues are described below.

Strategies for Building the IID Field

Complementary strategies for building the IID field and achieve its outcomes include:

Support for networking: The program will follow an explicit strategy to support
interdisciplinary research networks to deepen and accelerate learning. Sub-
regional networks will be strengthened and globally networked with the GRIID
research group and others. Existing projects to be networked include “grassroots
innovation”, “pro-poor innovation” and “innovation for inclusive development” in
South Asia, “innovation at the base of the pyramid (iBoP-Asia)” in Southeast
Asia, “social technologies” in Latin America, a project on building capacity for
STI indicators in Africa, and one on innovation in the BRICS countries.

Building Network Capacity: The program will follow complete capacity building
(IDRC Evaluation Unit, 2007), in order to strengthen the ability of the networks to
undertake and manage research and put it to use. This approach involves
building capacity in multiple areas. Training could be given to network members
on, for instance, social and gender analysis, research communications, and
evaluation. It could also mean providing administrative training and capacity
building for managing network members and sub-granting relationships across
organizations and countries.

Building Southern leadership: A key and explicit tactic within the program’s
networking strategy is to enable Southern leadership to emerge. Through a
range of capacity building approaches, including those described above,
fellowships and awards and the development of university courses, a set of
Southern students and scholars, will be encouraged to participate in building the
IID field.

Knowledge generation: One of the key ways to develop these concepts and
ideas is to consolidate research findings from existing case studies. Once
common issues emerge from these case studies, IID will begin to support pilot
participatory research projects in several regions that involve key stakeholders
(boundary partners, such as informal sector actors, particularly women,
intermediaries, and policy makers). The purpose of these participatory studies
will be to identify innovative activities taking place in the informal sector and the
policy or institutional bottlenecks they face.

Scholarly publications: The intended strategy is to partner with the new journal
Innovation and Development (Routledge), which was established in 2010, to help
make it a preeminent publication with a strong Southern voice that helps to build
the IID field.

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Transition of ITS activities

Over its five years of programming, the program will devote at least 80% of its program
funds to the core field, while 10% will be reserved to new and emerging issues. Given
the greater focus of programming around IID, the program will use the final 10% to
transition several existing activities:

Science, Technology, and Innovation Policy Reviews: Informing the
development, review, and implementation of national STI policies so that they
incorporate IID will be part of the program’s on-going work. However, each year, the
Centre receives several requests for support for the development and review of
national STI policies, with elements far beyond the scope of IID. These STI policy
reviews have generally had a very high return in terms of policy influence, but a
mixed record in terms of building capacity, as they are often carried out by
international specialists, rather than local researchers. The program intends to
transition these activities to a Southern network of interested countries and
organizations that would be interested in building local and regional capacity for
conducting these reviews.

Socio-economic impacts of Emerging Technologies: ITS-supported research
has resulted in biosafety policy recommendations and “good practices” for assessing
socio-economic impacts of genetically modified crops on small-scale farmers in
developing countries. An impact assessment “toolkit” is being developed within
existing projects to assist developing countries integrate socio-economic
assessments into policy-making processes. Other donors and foundations have
indicated an interest to continue this work and IID will support the formation of a
global network of researchers and other stakeholders as a way of transitioning this
programming.

Science Journalism: ITS has supported a number of science journalism projects in
the past, including peer training for the development of science journalism in Africa
and the Middle East, as well as core-support for the Science and Development
Network (Scidev.Net). These activities are important to the Centre as a whole and
these projects will be transitioned into cross-cutting funding to be managed by IID
and the Communications Division and funded by Forward Planning.

Cross cutting issues

IID will address cross-cutting issues in the Centre’s strategic framework as follows:

Global governance: Poverty indicators now point to a “new Bottom Billion” of
people living in multi-dimensional poverty in middle income countries. The program
will seek to communicate how improving livelihoods through innovation in the
informal sector is crucial to global governance in post-MDG framework debates. The
program will seek recipients to engage in the lead-up debates to the UN high-level
summit in September 2013. A policy influence strategy to work with the OECD,

12


UNCTAD, and/or UNESCO, which are already interested parties in the research
outputs from this program, will be given priority planning via several active projects.

Gender: As already described, the program has an explicit focus on women and will
support gender analysis research capacity building.

Within IID, ICTs will not be a main entry-point; however, they will be addressed in
so far as they relate to innovative services that contribute to livelihoods in informal
settings, such as the sale and maintenance of cellphones.

4. Regional and Thematic Priorities

This section reviews the regional aspects that are pertinent for shaping IID’s
programming. Figure 3 shows a preliminary assessment of low- and middle-income
country innovation systems and policies. As previously noted, there is a high correlation
between countries with structured systems and their overall level of development;
however, many middle income countries are also witnessing significant inequality and
poverty. As discussed below, IID programming will be responsive to regional contexts,
however, networks that link countries across regions with similar characteristics may
also be pursued—for example, a network of low-income countries with entry or
fractional innovation systems, or another of BRICS-plus countries, that have structured

13


innovation systems, but nevertheless, large informal sectors with only marginal
innovative activities.

Despite recent improvement in Africa’s overall economic performance, it contains some
of the world’s poorest countries. Three quarters of Africans live in low-income
settlements. Informal employment represents 72% of non-agricultural employment in
the region and up to 78% when South Africa is excluded (ILO 2002). Understanding the
dynamics of the informal sector in Africa and devising strategies to empower
marginalized people by adding value to livelihoods through innovation is thus crucial.
Specific attention will be given to universities, the private sector, and intermediary

14


organizations—mostly NGOs—and the way in which they help to build and channel
innovative capacities in the informal sector. IID’s active project on the governance,
quality and relevance of university research in West Africa, and lessons from the closed
4th RoKS competition “Developmental Universities: A Changing Role for Universities in
the South” are expected to provide relevant lessons for future programming.

The Middle East and North Africa has suffered from decades of low STI investment,
political interference in agenda setting, and low quality and quantity of research output.
Recent developments may offer a niche for IID programming in MENA. First, there were
signs of increasing respect for the value of science in the region, accompanied by some
significant investments by higher income countries. For instance, Turkey increased it
spending on R&D by 600% over the last 10 years. Second, is the 2011, so-called Arab
Spring. However, the number of unemployed, disaffected youth is a key challenge in
MENA, and growing numbers of unemployed people continue to join the informal
economy, which exacerbates the situation by pushing wages down (Saif & Choucar,
2009). Improving the lives and livelihoods of those within the informal sector will be
critical to sustain the movement towards greater democracy in the region, and thus
offers a clear niche for IID. At the same time, potential democratization of institutions in
countries such as Egypt and Tunisia, such as rescinding the requirement of security
agency approval for research and the election of University Presidents and Deans may
ease the top-down approach to innovation and influence formal STI actors to be more
open to an IID approach. Programming in this region will be informed by the on-going
IID project on the Atlas of Islamic Innovation, which is mapping and evaluating the
changing landscape of STI in countries across MENA.

Asia, home to two thirds of the world’s poor with population expected to reach 5 billion
over the next 20 years, is also a region where the informal sector is prominent as it
contributes 41% to GDP. Rapid urbanization is putting significant challenges on access
to basic services and the environment. In order to address these challenges, a growth
trajectory that is inclusive and ultimately contributes to sustainable livelihoods is
required. Building on its work in the region, in particular, the Innovation at the Base of
the Pyramid project (IBoP), IID will support research that focuses on enhancing
innovative capabilities in the urban informal sector and in rural areas while linking these
researchers to the global networks mentioned above. Emphasis will be placed on the
network of universities that are currently building capacity to focus curriculum and
research on innovations in the informal sector.

Parallel economies exist and function in most Latin American countries. Although the
informal economy is large and accounts for about 29% of GDP, many questions still
exists about its composition, size, and effects on economic growth. For example,
controversy has arisen about whether the informal economy is a manifestation of
poverty or can be a potential solution to poverty. The gender dimension to informality is
important as women are over-represented in informal employment, receive lower pay,
and belong to precarious occupational groups. Around three quarters of the population
in the Latin America and the Caribbean (LAC) region live in towns and cities, making it
the world’s most urbanized developing region. The programming focus on “social

15


technologies” will continue, although the group of researchers in this area will be
networked with others building the field of innovations for inclusive development.
Linkages with universities, particularly in Central America and the Caribbean, will be
strengthened through developing a network of LAC universities to pilot curriculum and
research related to innovation in the informal sector.

5. Concluding comments

After a period of internal reflection and external consultation, the program team
identified innovation for inclusive development as the niche where IDRC could make a
difference. IID aims to address the problem of the “new Bottom Billion” in the informal
sector. The program aims to produce knowledge and influence policy to transform
marginal innovative activities in the informal sector to sustainable innovations that have
wider impact and improve people’s livelihoods.

After the end of the five year program cycle, IID intends to have contributed to building
an inter-disciplinary field on innovation that leads to inclusive development through
improved and sustainable livelihoods. It will also have transitioned national STI policy
review activities to Southern networks and have in place a “network of networks” of
researchers working in the area of innovation for inclusive development that will help
shape global agendas around the post-MDG framework.

16


6. References

Cassiolato, J., Couto Soares, Ma. C., & Lastres, H. 2008. Innovation in unequal
societies: How can it contribute to improve equality? Paper presented at the
“Seminario Internacional: Ciencia, Tecnología, Innovación e Inclusión Social”,
Montevideo, Uruguay 27-28 March 2008. Online:
http://www.unesco.org.uy/ciencias-naturales/fileadmin/templates/cultura/cultura-
mercosur/archivos/CyT/Resumen-Couto25-3-08.pdf

Chambers, R., & Conway, G. 1992. Sustainable rural livelihoods: Practical concepts for
the 21st century. IDS Discussion Paper 296. Institute of Development Studies,
Brighton, UK.

Feige, E. 1990. Defining and Estimating Underground and Informal Economies: The
New Institutional Economics Approach. World Development, 18 (7): 989–1002.

Floodman Becker, K. 2004. Fact Finding Study: The Informal Economy. Stockholm.
Report for SIDA. Online:
http://rru.worldbank.org/Documents/PapersLinks/Sida.pdf.

Hart, K. 1973. Informal Income Opportunities and Urban Employment in Ghana. The
Journal of Modern African Studies, 11(1):61-89.

Howells, J. 2006. Intermediation and the role of intermediaries in innovation. Research
Policy, 35 (5) 715-728.

Huyer, S. 2004. Position paper on gender and science and technology from an
international perspective, United Nations Commission on Science and
Technology for Development. Washington, DC, USA.

International Labour Organization (ILO). 2002a. Decent Work and the Informal
Economy. Online:
http://www.ilo.org/public/english/standards/relm/ilc/ilc90/pdf/rep-vi.pdf

International Labour Organization (ILO). 2002b. Women and men in the informal
economy: A statistical picture. ILO, Genève, Switzerland. pp. 64.

Kaplinsky, R. 2010. Schumacher meets Schumpeter: Appropriate technology below the
radar. Research Policy, (193-203) 40.

Kraemer-Mbula, E., Wamae, W. 2010. Innovation and the Development Agenda,
OECD, Paris, France. Online: http://web.idrc.ca/openebooks/501-4/

Losby, J., Else, J.F., Kingslow, M., Edgcomb, E., Malm, E., Lundvall, B-A., Joseph K.J.,
Chaminade, C. 2009. Handbook of innovation and Developing Countries:

17


Building domestic capabilities in a global setting. Edward Elgar Publishing,
Cheltenham, UK. pp. 416.

Losby, J.L., Else, J.F., Kingslow, M., Edgcomb, E., Malm, E., Kao, V. 2002. Informal
economy literature review. ISED Consulting and Research and The Aspen
Institute. Online: http://www.kingslow-
assoc.com/images/Informal_Economy_Lit_Review.pdf.

Lundvall, B-A., Vang, J., Joseph, K.J., Chaminade, C. 2009. Innovation system
research and developing countries. In Handbook of innovation and developing
countries: Building domestic capabilities in a global setting. Edward Elgar
Publishing, Cheltenham, UK. pp. 1-30.

Neilson, S., Lusthaus, C. 2007. IDRC - supported capacity building : developing a
framework for capturing capacity changes. Online: http://idl-
bnc.idrc.ca/dspace/handle/10625/29146

Patton, M.W. 2010. Developmental Evaluation: Applying Complexity Concepts to
Enhance Innovation and Use. Guilford Press. New York. NY. pp 375.

Patrizi, P., Quinn Patton, M. 2009. Learning from Doing: Reflections on IDRC’s Strategy
in Action, Evaluation Unit, IDRC, Ottawa, ON, Canada.

Portes, A., Haller, W. 2005. The Informal Economy. In Neils Smelser and Richard
Swedberg, The handbook of economic sociology, 2nd Edition. Chapter 18. The
World Bank. pp 403-425. Online:
.http://rru.worldbank.org/Documents/PapersLinks/Informality/18-Smelser.pdf

Saif, I., Choucair, F. 2009. Arab Countries Stumble in the Face of Growing Economic
Crisis. Carnegie Endowment for International Peace. Online:
http://www.carnegieendowment.org/files/economic_crisis_wc_english.pdf

Schilderman, T., Lowe, L. 2002. The Impact of Regulations on Urban Development and
the Livelihoods of the Urban Poor. ITDG February 2002. Online:
http://www.dfid.gov.uk/r4d/PDF/Outputs/Urbanisation/R7850_SchildermanandLo
we_RGUU2.pdf

STEPS Centre. 2010. Innovation, Sustainability, Development: A New Manifesto. The
STEPS Centre (Social, Technological and Environmental Pathways to
Sustainability), Brighton, UK.

Summer, A. 2010. Global poverty and the new bottom billion: Three-quarters of the
World’s poor live in middle-income countries. Institute of Development Studies
(IDS), Sussex, UK.

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UNDP. 2010. Human Development Report: The real wealth of nations. United Nations.
Second printing, November 2010. UNDP, New York, NY, USA.

UNESCO. 2010. UNESCO Science Report 2010. UNESCO, Paris, France.

Williams, C. 2007. Entrepreneurship and the informal economy: a study of Ukraine’s
hidden enterprise culture. Journal of Developmental Entrepreneurship, 12(1),
119–136.

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