Innovation and private sector growth are vital to fostering wider economic development, yet are often overlooked in the industrial policy of many developing countries. In research that has transformed conventional thinking, academics from The Open University have provided evidence on the benefits of private sector investment and local innovation in Africa. Their work has supported changes in international policy that better integrate innovation, helping to strengthen emerging economies as well as improve local livelihoods.
Investment in innovation and private sector expansion are key to wider economic development, providing much-needed boosts to local industry and employment. However, industrial policies in many developing countries fail to support local innovation. An over-reliance on foreign imports, for example, and too little investment in local alternatives, can stunt the growth of domestic economies. Researchers from The Open University have made major progress in untangling the complex process by which investment, innovation and economic development interact in Africa. Their work – funded by the Department for International Development and the Economic and Social Research Council – has identified new policies that are able to support local growth and allow African policymakers to promote innovation more effectively.
While examining access to medicine in Tanzania, the researchers made a surprising discovery. A widely held view has been that local pharmaceutical production in Africa is costly, poor quality and uncompetitive. But the researchers found that in Tanzania, rural populations depended heavily on locally manufactured medicines with a good reputation, while importers’ distribution systems skewed supply towards the urban and more affluent areas. They found, furthermore, that with the right mix of industrial and health policies, local pharmaceutical manufacture was both financially viable and capable of improving medicine access in many Sub-Saharan African countries. These findings helped to change the global pharmaceutical policy landscape, with one official of an international funding body commenting that the lead Open University researcher was one of only six academics who had shaped perspectives, policy and practice in this field. The research has also had direct impacts on local industries in Tanzania and Zimbabwe. It has led to the development of new facilities, and enabled one firm to access $10 million worth of financing from an African development bank to invest in local production equipment and machinery.
The Open University researchers also looked at agricultural innovation and once again revealed the power of local business. For example, research as part of the DFID Research into Use programme used a ‘Dragons Den’-style competition in Nairobi, bringing local projects in front of a judging panel of African venture capitalists and entrepreneurs. This led to the creation of a range of projects that subsequently have helped to create pioneering agro-businesses. These have created jobs and training opportunities, while also improving agricultural productivity and strengthening local food security. Successful projects have included a business using seed priming to maximise the potential of seeds planted and a project designed with university students to treat cattle in order stop the spread of sleeping sickness. The latter has now aroused the interest of venture capital funders.
In these and other ways Open University research has impacted the policy decisions and strategies of European, African and international organisations, demonstrating how technology development funding and aid can be better directed into local business. The research also revealed the benefits of initiatives and perspectives that span sectors and informed strategies of public-private partnerships. Importantly, it encouraged a move towards a more systems-based approach to innovation and highlighted that linking up traditionally separate policy areas – such as health, finance and agriculture – can better support policy goals, the economy, and livelihoods of local people.
Read more about this research in the original impact case study submitted to the Research Excellence Framework 2014.