Innovation systems in developing countries

This paper provides a review of what every developing-country policymaker should know about low-carbon innovation. It explains what is unique about low-carbon innovation, why low-carbon innovation systems matter, and in what ways they need to be strengthened. However, building low-carbon innovation systems is a resource-intensive and long term endeavour, the outcomes of which are neither guaranteed nor predictable, and no single approach fits all national contexts. To mitigate the risky nature of building innovation systems, the public sector needs to provide financial support alongside private sector investments. Innovations emerge from a system of interconnected firms, (research) organisations and users all operating within an institutional environment that supports the building and strengthening of skills, knowledge and experience, and further enhances the interconnectedness of such players. Successful development and adoption of low-carbon technologies in developing countries depends on the presence of appropriate policies and innovation systems. Appropriateness means they are responsive to their local context in terms of available resources, comparative advantages, societal characteristics and cultural practices. Innovation skills and knowledge should be built in tandem with the adoption of lowcarbon technologies and practices. An advantage for poorer developing nations stems from the weaker entrenchment of vested interests and less well established energy infrastructures. These provide opportunities for more easily steering development in low-carbon directions, avoiding the high-carbon pathways that industrialised countries have taken. International initiatives could help to build low-carbon innovation systems in developing countries, but they should align with national policies of countries in order to better enable self-determined low-carbon innovation.