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Revisiting some of the Theoretical and Policy Aspects of Innovation and Development IERI 10th Anniversary Working Paper

It is now well established in the literature that innovation constitutes a key process underpinning economic change within capitalism. This does not, however, imply that there is a single perspective that informs policy thinking about innovation. Over the preceding decades diverse interpretations have emerged resonating with the general idea that “...a national system of innovation can only be judged as healthy if the knowledge, technologies, products and processes produced by the national system of science, engineering and technology have been converted into increased wealth, by industry and business, and into an improved quality of life for all members of society” (DACST, 1996: 18). Whilst the South African reading of the literature has attempted to draw together commercial and social interpretations, both interpretations have generally derived ‘innovation’ narrowly from the science and technology (S&T) sector of the economy (Scerri, 2009 and Maharajh, 2011).
This interpretation typically represented S&T as the key element of ‘the engine of growth’ and thus, by proxy, the route to increased productivity, competitiveness and economic prosperity and consequently argued that an improved S&T sector would result from increased expenditure on research and development (R&D). Within mainstream economics and its attendant planning framework, the S&T sector is generally viewed as an important but essentially exogenous component of the general economy. This approach represents, in our view, a fundamentalist orthodoxy and remains largely embedded within the teaching of mainstream neo-classical economics. In effect, in mainstream economic thinking innovation is seen as an important exogenous determinant of the value added content of production which increases the competitiveness of firms and economies, leading to economic growth and therefore to an increase of overall societal welfare. This approach to the causal relationship between innovation and economic growth even if somewhat simplified here, represents the core of orthodox thinking on the economic role of innovation. As we will argue below, this questionable reasoning stems from the internal logic of mainstream economic theory.
Date10 February 2014
CreatorsKraemer-Mbula, E, Maharajh, R, Motala, E, Ndabeni, L, Osha, O, Scerri, M
PublisherInstitute of Economic Research on Innovation
Source SetsSouth African National ETD Portal
Detected LanguageEnglish
RightsInstitute of Economic Research on Innovation

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