Entrepreneurship and Innovation in Developing Countries : How the ITA can help

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Entrepreneurship and Innovation in Developing
Countries How the ITA can help

• Bruno Lanvin, the World Bank

WTO, Geneva 18 October 04
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IT and development

• Globalization
• Entrepreneurship, innovation and growth
• Efficiency and transparency
• Regulatory and legal framework
• Issues and challenges ahead

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IT and development

• Globalization
• Entrepreneurship, innovation and growth
• Efficiency and transparency
• Regulatory and legal framework
• Issues and challenges ahead

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Engines of globalization
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Four Ways of Being Global (2003)
Source Foreign Policy and A.T. Kearney
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Is
Globalization
Slowing Down?
Globalization advanced briskly until
1997, when the financial crises that hit
various developing regions weakened
trade flows and undercut gains in
global integration. So why did overall
integration still increase during this
period? Simple Technology has
become the engine of globalization.
Technology factors
Percentage
of population online, number of
internet hosts per capita, and
number of secure servers per
capita
Non-technology factors
Trade
in goods and services, capital
flows, and personal contact.
Source Foreign Policy and A.T. Kearney
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IT and development

• Globalization
• Entrepreneurship, innovation and growth
• Efficiency and transparency
• Regulatory and legal framework
• Issues and challenges ahead

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Obstacles to entrepreneurship in DCs
Source World Development Report, 2005 (World
Bank)
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Source World Development Report, 2005 (World
Bank)
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Source World Development Report, 2005 (World
Bank)
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Sources of growth

• Growth in inputs
• Efficiency in factor allocation
• Innovation (useful knowledge)
• Vehicles (trade, FDI,..)
• Cross-border education
• etc

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Growth, Innovation, Enterpreneurship
Regulatory Competition Framework
Monetary Fiscal Policies
Domestic
Governance
Macro- Economic Policies
Growth
Rule of Law Corruption
Domestic savings
IPRs
Capital Formation
Entrepre neurship
Innovation
T of Tech Openness
F.D.I.
Trade Policy
Global Reach
Exports International competition
External
Niches Alliances
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The crucial role of innovation

• Technological innovation
• Disruptive vs incremental ?
• Individual vs collective
• Process innovation
• Non technological innovation
• Shifting value along the chain

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Source World Development Report, 2005 (World
Bank)
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IT and development

• Globalization
• Entrepreneurship, innovation and growth
• Efficiency and transparency
• Regulatory and legal framework
• Issues and challenges ahead

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IT and development

• Globalization
• Entrepreneurship, innovation and growth
• Efficiency and transparency
• Regulatory and legal framework
• Issues and challenges ahead

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Strong Public Sector
7.00
FIN
SWE
GER
USA
UK
CHL
AUT
CAN
HKG
NOR
DOM
FRA
SIN
6.00
ITA
SWI
POR
ICE
NET
First circle (top performers)
TAI
BRA
ELS
KOR
AUL
VEN
NWZ
DEN
ARG
BEL
SPA
BUL
SLK
ISR
EST
5.00
JAP
LUX
INI
PHI
HUN
JOR
Second circle (the contestants)
IRE
EGY
SRI
MLT
THA
CZE
GRE
PER
Facilitators
GUA
INO
4.00
JAM
PAN
URU
MEX
TUR
BOL
RUS
VIE
POL
CHN
LAT
ROM
ZIM
UKR
3.00
PAR
COS
LIT
SAF
NIC
COL
SLV
Third circle (ready or not)
BAN
NIA
TRI
ECU
HON
2.00
MAU
8.00
2.00
3.00
4.00
5.00
6.00
7.00
Leaders
Source World Economic Forum/INSEAD/infoDev
Note the Government variable of the GITR
index has been used as proxy for Government
leadership (x), whereas Competition in
telecoms has been used as an indicator of the
effectiveness of Governments as facilitators (y)
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Multi-purpose IT The example of trade
facilitation

• Trade competitiveness
• Attraction of FDI
• Governance (transparency, accountability,..)

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Potential for additional off-shoring ?

• In G-7 countries, 1-5 of active population could
  be affected (World Bank 1995)
• Maximum number of current jobs affected in US 14
  mn (Bardhan and Kroll 2003)
• Projected number of US services jobs outsourced
  by 2015 3.4 mn (Forrester 2004)
• In financial services alone, 2 mn jobs could be
  affected during the next 5 years (Deloitte
  Touche 2003)
• 70 of the biggest 1000 firms have not outsourced
  services jobs towards lower-cost countries
• Delayed cost-savings measured are estimated at
  20-40

Source World Investment Report, 2004 (UNCTAD)
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IT and development

• Globalization
• Entrepreneurship, innovation and growth
• Efficiency and transparency
• Regulatory and legal framework
• Issues and challenges ahead

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How can ITA help ?How is 2004 different from
1996 ?

• Globalization becoming information-centric
  (competitiveness, efficiency, governance)
• Life-cycle of IT products becoming shorter (gt
  lesser tolerance to procedural obstacles)
• Mainstreaming of IT as a development tool (DOT
  Force, MDGs, WSIS)
• Proper regulatory and legal frameworks have
  proved their power to bring prices down
  internally
• ITA can contribute to turn all of the above into
  powerful instruments for development

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Merci
blanvin_at_worldbank.org