REVISED: 13 November 2007
Research Proposal
How National Public Policies Encourage or Impede Agribusiness Innovation:
Studies of Six African Countries
AGRICULTURE AND INNOVATION
In recent years, a number of nations have sparked their economic performance through
adoption of what has come to be called the “new agriculture” (World Bank 2006: 8). In
fact, the World Development Report of 2008 is dedicated largely to an analysis of this
phenomenon. In essence, the “new agriculture” refers to a series of mutually supporting,
often knowledge-intensive innovations that enable a country’s agricultural producers to
move up the value chain in the competitive international market for agricultural exports.
Examples include salmon farming in Chile, palm oil production in Malaysia, floriculture
in Kenya, fish exports in Uganda, herbal remedies in India, shrimp farming in
Bangladesh, pineapple production in Ghana, and numerous others (Chandra 2006; World
Bank 2006). The attraction of the “new agriculture” lies in the possibility for a
developing country to exploit its latecomer status to close the gap with developed
countries in particular commodities or sub-sectors through the application of more
knowledge-intensive and market driven production technologies.
In Sub-Saharan Africa, the agricultural sector is a prime candidate to benefit from
innovation. Agriculture continues to be Sub-Saharan Africa’s dominant economic
activity, accounting for 40 percent of GDP, 15 percent of exports, and 60 to 80 percent of
employment. But by world standards, its productivity levels for many products are low
and the importation of foodstuffs is higher than it needs to be in some countries. Higher
agricultural productivity is thus a precondition for growth and development in most
African countries, and increasing yields is a key to raising incomes (and reducing
poverty) in rural areas. Within the agricultural sector, market-oriented production –
frequently referred to as agribusiness or agro-industry – is where innovation is likely to
have the biggest economic (and social) impact. Farmers and commercial producers may
benefit especially if they can diversify their production into higher value, but knowledgedemanding, products. This requires agricultural innovation.
Until it learns to grow its agricultural productivity, Africa is unlikely to register
significant developmental advances. Recognizing this reality, African governments
adopted in 2002 a Comprehensive Africa Agriculture Development Program under the
auspices of their New Partnership for African Development (NEPAD). This Program
states that larger investments in agricultural research, extension and education systems
are required to achieve the targeted increase in agricultural output of 6 percent a year
1
over the next 20 years. In March 2005 the international Commission for Africa, chaired
by former British Prime Minister Tony Blair, argued that greater attention should be paid
to the economic growth agenda in Africa and recommended higher investments in human
resource capacities linked to agriculture, science and technology, and tertiary education.
Shortly thereafter, participants at the G-8 meeting convened in Gleneagles, Scotland
affirmed this report and committed their governments to provide significant additional
funding in support of its objectives. In 2006 NEPAD issued a Framework for African
Agricultural Productivity (FAAP) as a guideline to member states for attaining the goal
of 6 percent annual increases in production. As a result, many of the political and
financial elements necessary for a concerted effort to upgrade African agricultural
productivity would seem to be in place. What are now needed are public policies that
create an enabling environment for agricultural innovation which reduces risk and
encourages investment so that these new opportunities can be grasped.
INNOVATION SYSTEMS
Although the innovation systems concept is relatively new to agricultural policymakers
and agricultural research managers in developing countries, it is increasingly suggested as
a way of revisiting the question of how to strengthen agricultural innovation capacity
(Hall et al. 2001; Clark et al. 2003; Hall 2005).1 The concept is derived from more
general conceptual work on National Innovations Systems (NIS) carried out a decade
earlier by Freeman (1987), Porter (1990), and Romer (1990), and subsequently elaborated
by Lundval (1992), Nelson (1993), and others. NIS is generally understood to refer to a
network of organizations focused on bringing new products, new processes, and new
forms of organization into economic use, together with the institutions and policies that
affect their behavior and performance (World Bank 2006: 16). In contrast to the earlier
linear model of scientific discovery, diffusion and adoption, the NIS is framed as an
interactive network of diverse actors where innovation can arise at any point.2 In
Attachment 2, there is an overview of the Attributes of an Innovation System.
Innovation is not synonymous with invention. Invention culminates in the supply
(creation) of new knowledge, but innovation encompasses the factors affecting demand
1
“Studies that use an innovation systems framework are able to analyze processes that are typically
overlooked in the linear approach to research and development (R&D). Innovation systems studies often
open the “black box” of innovation to analyze actors’ motives and behaviors; the institutions that shape
these motives and behaviors; interactive, joint, and complementary processes of innovation; and the
dynamics of institutional learning and change. They also provide analyses that extend beyond single
industries or markets, capturing a wider range of agents (public and private), interactions (competition,
cooperation, and learning), institutions (social practices and norms), and policies (science, technology,
trade, education, and investment) that condition agents’ interactions and responses to innovation
opportunities. Further, they often provide analyses of policy design from the perspective of policy as a
continuous process that adapts to institutional and technological opportunities presented by socio-economic
change and development. This differs significantly from the neoclassical assumption that policy is the
domain of fully informed social planners who reconcile social and private welfare within a system of
rational maximizers” (Spielman 2006b:57).
2
For a useful review and critique of innovation systems literature in the context of agricultural
development, see Spielman (2006a).
2
for and use of knowledge in novel and useful ways. The notion of novelty is fundamental
to invention, but the notion of the process of creating local change that is new to the
user, is fundamental to innovation. Specifically, innovation is the process by which
organizations “…master and implement the design and production of goods and services
that are new to them irrespective of whether they are new to their competitors, their
country, or the world” (Mytleka 2000).
Some of the distinguishing characteristics of innovations and the innovation process
include (World Bank 2006):

Innovations are new creations of social and economic significance. They may be
brand new, but they are more often new combinations of existing elements.

Innovation can comprise radical improvements but usually consists of many small
improvements and a continuous process of upgrading.

These improvements may be of a technical, managerial, organizational, institutional
(that is, the way things are routinely done), or policy nature.

Very often innovations involve a combination of technical, institutional, and other
types of changes.

Innovation can be triggered in many ways. Bottlenecks in production within a firm,
changes in available technology, competitive conditions, international trade rules,
domestic regulations, or environmental health concerns may all trigger innovation
processes (Rosenberg 1976, Dosi et al. 1988, Chandler 1990, and Nelson 1993).
Innovations can be divided into four categories: technical, marketing, organizational,
and institutional/procedural. A particular innovation often combines changes in two or
more of these areas.
To date, however, most research on agricultural innovation has focused on the process
whereby a specific new product was identified and developed. Efforts to assess and
improve the overall performance of a national agricultural innovation system have been
rare. This shortcoming inspires the current research proposal, wherein public policy
becomes the focus of investigation.
THE ROLE OF PUBLIC POLICY
An important implication of the innovation systems approach is that innovations can
emerge at any point in the system as the result of consciously mediated or coordinated
interactions among different types of agents. Thus, the appearance of innovations does
not necessarily depend on any government action – although these actions can have great
influence on the evolution and strength of particular innovations. Seen from this
perspective, an innovation system is larger than the national research system (NRS), and
larger than the set of public-sector organizations charged with the creation and
3
dissemination of new technologies.3 In other words, multiple sources of innovation can
be found to exist in practice (Davis et al. 2007: 9).
The innovation systems perspective has so far given little attention to policy analysis
(Spielman 2006a: 49). This shortcoming may be caused by the depth, breadth, and
complexity of de facto innovation policy—which often embraces policies in industry,
agriculture, trade, finance, education, science and technology, labor, and others (see
Attachment 1). To provide useful guidance for national development purposes, analyses
of innovation policy will need to move beyond case studies of specific innovations to
more comprehensive analyses of national and sectoral policies at a level that is applicable
for singling out policy options or for constructing cross-country benchmarks and
indications of best practice. By combining well-grounded empirical analysis with a good
understanding of the institutional context in which innovation occurs, innovation systems
research can be a powerful tool for designing public policy and associated incentive
structures (Omamo 2003).
Porter (1990:19) argues that the policies espoused by government can make a difference
in creating and sustaining national competitive advantage as a highly localized process.
Differences in national economic structures, values, cultures, institutions, and histories
contribute to competitive success. Thus, although the globalization of competition
might appear to make the nation-state less important, the role of the home nation has, in
fact, become stronger than ever. Therefore, public policy plays an important role in
either facilitating or impeding conditions that are favourable to innovation.
Porter (1990:617) reasons that public policy directly influences the national competitive
advantage of firms. Governments cannot create competitive firms; only firms can do
this. But governments can influence the operating conditions and institutional
structures that surround firms.4 Thus, governments’ most powerful roles are indirect
rather than direct. That is, they “steer” by shaping the business environment rather than
by intervening directly. And what is most often being shaped in the business
environment are the incentives for innovation. Thus, “with the benefit of hindsight, it is
clear that leading industrial clusters in the OECD economies, Singapore and Taiwan
owe their existence to government actions” (Yusuf 2003).
Nelson (1993:9) also emphasizes the role of the overall policy environment, the
educational sector, and idiosyncratic institutions that affect innovation but for which
international comparison is difficult (e.g., the role of individual funding agencies in
individual countries). He underscores the active role played by specific institutional
actors in shaping government policies. In particular, he points to institutional and
A country’s innovation system can be strong even when its national research system is weak. Ecuador and
many Central American countries, for example, have weak national research systems but strong innovation
systems that have allowed them to develop robust competitive export clusters in fresh fruits and vegetables.
On the other hand, the Soviet Union of the 1970s had a strong research system coupled with a weak
innovation system.
3
4
In the United States, for example, government has played an influential role in the technological
development of almost every globally competitive industry (Ruttan 2001).
4
policy choices that influence: (1) the nature of the university system; (2) the extent of
intellectual policy protection; (3) the historical evolution of industrial R&D
organizations; and (4) the division of labor between private industry, universities and
government in R&D performance and funding.
In their study of the common factors which support innovation in most industries, Stern,
Porter and Furman (2000:11-25) highlight: (1) overall technological sophistication of
the economy; (2) the supply of scientifically and technically trained workers; (3) the
extent of overall investments in basic research and higher education;5 and (4) the
policies that affect the incentives for innovation in any industry. In short, science and
technology policy, education/training policy, and fiscal policy are singled out as
especially relevant for fostering innovation. The authors find that countries which have
located a higher share of their R&D activity in the educational sector (as opposed to the
private sector or government) have been able to achieve significantly higher levels of
innovation, as measured by patenting productivity. They further conclude that
government policies at the provincial and local level also play an important role in
shaping national advantage (Stern, Porter and Furman 2000:29).
In his study comparing economic returns to investments in education between open and
closed economies, Cohen (2001:27) finds that a combination of openness from the
inside (i.e., labor markets) as well as openness to the outside (i.e., international trade)
generate the highest returns from national investments in human resource development.
Thus, labor and trade policies are also identified as being influential in nurturing a
nation’s economic competitiveness.
In assessing common elements of technological adaptation derived from ten country
studies of technological leap-frogging into profitable export activities, Chandra and
Kolavalli (2006: 6-7) emphasize the importance of “tacit knowledge,” i.e., information,
skills, interactions and procedures imbedded in individuals or organizational structures
such as firms, networks and public institutions. This finding points up the important
role played by organizational structures in the innovation process and also illuminates
the difficulties inherent within technology transfer undertakings. It also serves to
highlight the importance of technological learning processes in their own right and to
target them for special policy attention. The authors then go on to note (2006: 13) that
“National efforts to provide public support for technological adaptation, while
simultaneously encouraging institutional development, typically take some form of an
industry-specific policy.” Most often, these industry-specific policies combine
incentives for private initiative with the creation of government-facilitated institutions
that perform coordinating, regulating or facilitating functions.
Spielman (2006a) states that in an innovation system, the enterprise often constitutes the
focal agent of inquiry and represents the primary agent. In agriculture, this includes
multinational and national agribusiness companies, small/medium agro-enterprises,
5
They use the fraction of GDP spent on secondary and tertiary education as a measure of the intensity of
human capital investment.
5
individual entrepreneurs, farmer/producer associations, rural cooperatives, or other
community-based groups. These agents engage in the production, processing, marketing,
and distribution of agricultural commodities, as well as in the purchase of agricultural and
agro-industrial inputs. He makes an important point, which is that research on agricultural
innovation must begin from the perspective of the enterprise or firm. Spielman then
highlights several aspects of institutional behaviour that lie at the heart of the innovation
systems approach. He points to cooperation (only one of several forms of interaction) as
one of the key behavioral aspects of agents in an innovation system. Cooperation (e.g.,
networking, knowledge sharing, joint undertaking) is conditioned by the institutions that
promote or impede it. This concept is particularly relevant when studying learning
processes or relationships that blur the traditional roles of distinct actors—for example,
partnerships between public and private research entities.
In an empirically based analysis of Learning to Compete in African Industry, OyelaranOyeyinka (2006: 1) concludes that a major constraint on the competitiveness of African
firms is the absence of the right kinds of institutions to support technological change.6
Examples include those that carry out R&D, evaluative testing, quality assurance,
enforcement of laws and standards, networking, and information dissemination.
Consequently, he argues that the market alone is not sufficient to promote the
organizational interactions required for innovation, and therefore that an important role
of the state is (a) to create new institutions where they do not exist; (b) re-structure
institutions in response to change; and (c) re-shape the interactions among firms and
organizations through the use of steering incentives (Oyelaran-Oyeyinka (2006: 175).
In short, one role of public policy is to change institutional actors and modify
institutional rules as new circumstances arise in order to encourage technological
learning. From this perspective, any state initiative to create new public agencies or restructure old ones is also an expression of public policy.
To recapitulate, public policies alone cannot produce innovation. But well-crafted
policies can facilitate, steer, and reinforce it as desirable behaviour by individuals, firms
and institutions. In the same way, poorly conceived public policies can stifle, retard or
penalize innovation. Although policies from a wide range of sectors may – depending
on the technological characteristics and production conditions associated with a
particular good or service – combine to exercise such positive or negative effects on
innovation processes, studies carried out to date suggest that policies most relevant to
innovation tend to be found in the areas of human development (especially worker
training and technical/university education), trade, taxes and subsidies, research and
6
Institutions are understood here to be a set of rules, supported by a system of incentives and penalties and
enforced by organizations, that translate the policies espoused by governments (Freeman 2002).
6
development, law and jurisprudence, labor and employment,7 science and technology,
and information flow and censorship.8
From these and other pieces of research on innovation, it is clear that a wide range of
public policies have a potential to foster or impede the innovation that leads to
productivity gains, which in turn translate into greater competitiveness.9 But it is also
clear that which policies are most relevant to this process will vary from one country to
another and be determined by local values, institutional cultures, and business conditions
surrounding key production inputs in a particular sub-sector of the economy, e.g.,
agribusiness. This means that, although developing countries can often learn useful
lessons from the successful experiences of other nations, they ultimately will have to
devise their own unique strategies for development. In doing so, of course, they may
save time and find inspiration in adapting the approaches used by others. But even these
choices as to what to use and what to discard will be conditioned by local values,
institutional capacities, and economic conditions.
THE PROPOSAL
In order to assess the extent to which the prevailing national portfolio of public policies
either enhances or impedes the possibilities for growth-stimulating innovation in Africa’s
agricultural sector, a comparative assessment of six African nations will be carried out.
The analysis will encompass policies from all sectors that hold a potential for shaping the
possibilities for agricultural innovation. A working list of these policies is provided in
Attachment 1. However, it is recognized that this list, although a comprehensive
reference, is too extensive to serve as a useful framework for research analysis.
Therefore, the study will seek to select the most relevant sub-set of policies from this list
and evaluate the extent to which the corresponding policy environment created by these
policies is conducive to agricultural innovation. The review of the literature presented
above suggests an initial framework that focuses on policies in six areas: (a) education
and human resources; (b) the creation of new knowledge; (c) the transmission and
adoption of knowledge; (d) business and enterprise; (e) innovation finance, outputs and
markets; and (f) interactions and linkages.10 The ultimate research goal will be to
identify the four or five policies that producers/firms see as placing the greatest
constraints on their innovation efforts.
7
Labor policy is particularly important as it relates to incentives provided to firms to upgrade worker skills
and technologies. One way to do this is by encouraging linkages between firms and universities or other
knowledge generation and/or repository centers (Oyelaran-Oyeyinka 2006: 85).
8
To some extent, indices used to assess the quality of the business environment across countries also
provide a reading on the climate for innovation, e.g., the World Bank’s annual “ Business Environment and
Enterprise Performance Survey” or “Ease of Doing Business” rankings.
9
Several observers note that the financing of innovation is often given insufficient attention within the
policy arena.
10
The role of networks, linkages and informal relationships is particularly critical for the functioning of
agricultural innovation systems. “Different actors integrate into innovation networks to achieve economies
of scale and scope, reallocate labor and human capital more efficiently, reduce transaction costs, exploit
complementarities, and realize synergies in the innovation process. These networks can vary from informal
interactions…..to very complex contracts….” (Spielman and Birner 2007:32).
7
The countries to be assessed would be Ghana, Kenya, Mozambique, Rwanda Tanzania,
and Uganda. Several considerations justify these particular choices. First, in one way or
another, each of these countries has registered recent progress in the area of agricultural
innovation. Second, Kenya, Mozambique, Rwanda, Tanzania and Uganda are all in the
process of launching ambitious national science, technology and innovation plans. Third,
policymakers from five of these six countries attended a workshop organized by the
World Bank Institute and the Government of Ireland in March 2007 with the goal of
advancing the innovation agenda in their countries. Finally, four of these countries are
current beneficiaries of Danish development assistance in the form of Agricultural Sector
Programme Support financing, where an improved climate for innovation could enhance
the results obtained from this collaboration.
Each of the country studies would be conducted by a national researcher familiar with the
literature on agricultural innovation systems. A list of possible candidates identified for
each of the six countries is presented in Attachment 2. Given the ground-breaking nature
of this research, many of them might require close guidance in order to conduct useful
national-level analyses of agricultural innovation systems and their policy environments.
Research Questions. The following topics would serve as a focus for the research
undertaking:

How do agribusiness representatives and other informed observers assess the
overall public policy climate for innovation in the agricultural sector?

Which policies and/or public institutions are playing a useful role in this regard,
and which are not?

What changes in policies and/or public institutions would be most conducive to
improved prospects for agricultural innovation in the country? Are some policies
in conflict with others, e.g., commodity focused agricultural research policies that
are not supported by trade policies?

What types of technical, financial and marketing/export services might support
this goal?
Scope of Inquiry. To keep the investigation manageable while ensuring a degree of
comparability and guarding against narrowness, it is proposed that the scope of inquiry
will focus on the three main sub-spheres of agricultural production within each country to
be studied: food staples (e.g., maize, rice, potatoes), high value products (e.g., flowers,
vegetables, fruits), and livestock (e.g., beef, dairy, pork).11
Methodology. This will be a labor-intensive undertaking, given that the investigation
cuts across several policy spheres and will be based on a number of personal interviews.
Interviewing is required because the topic does not lend itself to statistical analysis or a
desk review of existing research publications. In fact, key informant interviewing as
11
These categories are used frequently by IFPRI in its analyses (e.g., Diao and Pratt 2007; Spielman and
Birner 2007).
8
been used to good effect in assessing the conditions for innovation within countries.
Perhaps the best known example of this is the Global Competitiveness Index generated by
the World Economic Forum. In their efforts to develop appropriate indicators for
agricultural innovation system performance, Spielman and Birner (2007:23) advise that
“the value of expert surveys as a method to collect data should not be underestimated.”
Prior to the start of the research, the six country researchers would receive orientation and
be asked to develop a common research framework and agreement on the specifics of the
investigational approach. This exercise would seek to adjust the research design to what
is feasible in light of circumstances within the region, ensure comparability of the country
cases, and flesh out the research methodology. This would be done at a two-day
workshop to be held within the region early December 2007. This workshop would be
organized and led to a large extent by an experienced senior agricultural researcher (the
Research Coordinator) familiar with the concepts of agricultural innovation systems, who
would also provide methodological support to the researchers during the conduct of their
investigations. One representative of WBI and another from DANIDA would also
participate. A member from FARA and of the Addis Ababa-based IFPRI research team
involved in the analysis of similar issues will also be invited as a resource person.
Accordingly, the workshop would involve around ten persons.
Each case study would begin with interviews of 25 to 30 senior managers from a crosssection of domestic and international agribusiness firms and cooperatives operating in the
country. The interviewees would be equally distributed among the three categories
identified in the Scope of Inquiry above (i.e., food staples, high value products, and
livestock). The purpose of this would be to determine the main public policies and
institutional cultures of public organizations that generate positive or negative incentives
for innovation in that country’s agribusiness sector; (2) to evaluate the respective effects
of these policies; and (3) to suggest ways in which each identified policy might be either
reinforced (positive) or rectified (negative). Because agribusiness representatives are
probably unaccustomed to thinking in terms of innovation policies, the interview
questions would have to focus on practical issues and be problem-oriented. A tentative
list of interview questions is presented in Attachment 3.
Next, each researcher would cross-check this initial list of identified policies by asking 8
to 10 representatives of NGOs, business associations, and applied research centers for
their opinions on this matter. The results of the two sets of interviews would be
combined to assess the overall policy environment for supporting agricultural innovation,
and to identify policy improvements that would enhance the prospects for innovation.
The researcher would then select a final list of key policies and analyze available
documentation for each (e.g., legislative acts, government regulations, etc.)
The third step would require the researcher to interview at least three persons from each
ministry or public agency with primary responsibility for the area covered by each
selected policy. These interviews would seek to ascertain the extent to which the
institutional culture of the agency supports or constrains innovation, and identify possible
discrepancies between the written policy and public officials’ verbal interpretation of it
9
(i.e., “theory versus practice”). This step may need to incorporate some type of
institutional assessment that concentrates on characterizing the agency’s organizational
culture, understanding of innovation processes, staff attitudes towards innovation, and its
existing capacity to support innovation within the country.
Quality Control. To enrich interpretations and provide a measure of quality control, two
additional activities would be undertaken. On one hand, each researcher would also be
asked to comment in writing on one of the draft reports from another country (and
receive comments his/her draft report in return) in order to share insights and learn from
these experiences. On the other hand, the researcher would invite all persons interviewed
to a seminar at which the main conclusions of the study would be presented for comment,
suggestion and validation.
Output. The assessment and recommendations of the public policy environment for
agricultural innovation in each country studied would be presented in the form of a
single-spaced report of 25 to 30 pages in length. These reports would be shared with
World Bank and DANIDA staff with responsibilities for agricultural assistance programs
in these countries. In addition, they would be distributed or presented at a regional forum
on “Developing Technology and Innovation in Africa: Focus on Agriculture and Food
Industry” to be held at Nairobi May 12-14 2008. The purpose of this forum would be to
promote greater awareness of the roles of innovation in development, establish a baseline
for agricultural innovation policy analysis in Sub-Saharan Africa, and identify specific
policy interventions that might jump-start producer innovation within the agricultural
sector.
10
Attachment 1
Policies of Potential Relevance to Agribusiness Development
Agriculture Policy
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Land ownership structure
Research strategy
Extension/outreach strategy
Seed policy
Fertilizer policy
Regulatory services; certification
Support for development of rural organizations, e.g., producer associations, cooperatives.
Priority for agribusiness and agro-industrial activities
Civil Service/Public Employment Policy
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Performance incentives
Periodic performance evaluation and rewards
Accountability
Decentralized hiring and firing authority
Communications/ Information and Communications Technology Policy
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Cost structure and tariffs
Public/private provision and competition
Specific policies on rural access
Wireless capacities
Internet infrastructure and regulation
Freedom of press and media
Economic Policy
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National growth strategy (and priority for specific economic activities)
Taxation policy for corporations and individuals
Macro-economic stability (e.g., exchange rates, interest rates)
Energy Policy
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Rural supply: Available? Sufficient?
Cost structure, including possible subsidies for particular groups
Reliability (i.e., power outages cause poor product quality, waste and lower productivity)
Environmental Policy
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Water supply and quality standards
Waste water disposal and/or recycling
Land management
Tax incentives for good environmental practices, e.g., conservation.
Export Policy
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Certification procedures (e.g., organic, environmental, free trade, child labor, etc.)
Efficiency of clearance process
Tax or investment incentives for exports
11
Finance/Fiscal Policy
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Banking infrastructure
Credit and collateral requirements for producers, role of gender in this
Tax credits for R & D
Foreign investment promotion policies
Repatriation of profits policies
Commercial interest rates
Exchange rates and access to foreign exchange, e.g., for technology imports
ICT-assisted banking transactions
Venture capital and financing for experimental initiatives
Insurance industry development policy
Tax or financing incentives for facilities upgrading
Efficiency of Letter of Credit facility
Governance/Participation Policy
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Opportunities for representation, voice and demand articulation within public institutions such as
research centers, universities, etc.
Use of advisory boards with stakeholder representation, stakeholder consultations, consensus
decision making within public sector.
Transparency of public policy formulation/decision process
Human Development /Education Policy
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Budget priority for education sector; for tertiary education
The supply of scientifically and technically trained workers
High education standards, accreditation, and quality assurance mechanisms
Making teaching as a valued and prestigious profession in order to attract the best personnel
Ensuring that the majority of students receive education with some practical orientation (e.g.,
math, computing, writing, basic sciences, languages);
Attention to development of high quality, non-university tertiary level institutions, e.g.
polytechnics; technical colleges
Encouraging close interaction between educational institutions and employers, e.g., curriculum
advisory committees, student attachments in industry, etc.
Incentives for firms to invest in in-house training
Immigration policies that allow for in and out movement of people with specialized skills
Informal education, adult education and distance education policies
Business/entrepreneurship training programs
Frequency and process for curricula reviews
Role of gender articulated in the above.
Health and Sanitation Policy
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Urban food supply and nutrition policies
Sanitation and hygiene requirements
Quality standards and regulations (at an international level)
Worker safety standards
Child labor policy
Import Policy
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Duties, exemptions
Time needed for processing
12
Information Policy

The quality and amount of information available in a nation is of growing importance in modern
international competition. Government plays an important role in expanding the stock of
information available to firms, through statistics, publications, media licensing, and disclosure
regulations. It can also facilitate dissemination. An important governmental role is “signaling” of
important information or trends relevant to firms (e.g., MITI study groups on trends in Japan).
Infrastructure Development Policy
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Rural roads
Storage/warehousing
Shipping (air and sea)
Input suppliers
Water supply
Electrical supply
Legal Guarantees
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Intellectual property protection
Patent protection
Contract enforcement and remedies
Licensing and franchising
Enforcement of government weights and standards
Property rights and remedies
Efficiency of judicial system (i.e., time needed to reach a decision)
Anti-corruption policies
Private Sector Development Policy
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

Approaches to agribusiness
Business incubators; government business spin-offs
Information sharing mechanisms, e.g., newsletters, radio programs
Special assistance to small and medium enterprises
Role of NGOs and private advisory services in business development
Inputs suppliers
Metrological services (quality testing, standards compliance)
Science and Technology Policy









Research and development emphasis on idea production versus goods production
Research financing effort; research subsidies for specific industries; performance incentives
Funding arrangements promote cross-sector approaches, collaborative partnerships, innovation
The division of labor between private industry, universities and government in R&D
Funding competitions for university research
Establishment of national research laboratories
Sharing in the cost of applied research
Tax incentives for use of approved technologies
Facilitating the acquisition and dissemination of technologies
Trade Policy







Openness to international competition
Subsidies for local producers
Preferential trade agreements
Free-trade or export promotion zones
Trade associations
Government export promotion policy
Local content in exports requirements
13
Attachment 2
Attributes of an Innovation System12
An innovation system can be defined as a network of organizations focused on bringing new
products, new processes, and new forms of organization into economic use, together with the
institutions and policies that affect their behavior and performance in doing so. The following
paragraphs summarize eleven analytical insights taken from the innovation systems concept.
These insights can be used to develop a framework for using the innovation systems concept to
diagnose the strengths and weaknesses of existing innovation capacity in specific settings as well
as to guide investments and interventions to strengthen this capacity.
1. Focus on innovation rather than production. In contrast to most economic frameworks, which
focus on production or output, the focus here is on innovation. Innovation is understood to be
neither research nor science and technology, but rather the application of knowledge (of all
types) in the production of goods and services to achieve desired social or economic
outcomes. So, for example, the development by a research organization or a company of a new
packaging material is an invention. In contrast, a company packaging its product in new way
using new and/or existing information is an innovation.
2. Interaction and learning. Innovation is an interactive process through which knowledge
acquisition and learning take place. This process often requires quite extensive linkages with
different knowledge sources. These sources may be scientific and technical, but equally they can
be a source of other forms of knowledge, both tacit (e.g., experiential, indigenous) and codified.
Patterns of interaction between different knowledge sources form a central component of an
organization’s or sector’s capacity to innovate. Ideas like the creation of business incubators,
science parks, and export promotion zones are responses to the need to strengthen the intensity of
interaction to promote the process of innovation.
3. Linkages for accessing knowledge and learning. The relationships that sustain the
acquisition of knowledge and permit interactive learning are critical for innovation and can
take many forms. They can be partnerships, for example, in which two or more organizations
pool knowledge and resources and jointly develop a product, or they can be commercial
transactions, in which an organization purchases technologies (in which knowledge is embedded)
or knowledge services from another organization, in which case the relationship is defined by a
contract or license. Linkages may also take the form of networks, which provide an organization
with market and other early-warning intelligence on changing consumer preferences or
technology. Networks also embody the “know who” of knowledge sources, which can be tapped
as the need arises. These linkages and the relationships that govern them concern knowledge
flows. They must not be confused with the linkages and relationships that govern the movement
of commodities through value chains, although many of the same actors may be involved.
4. New actors, new roles. In the linear model of technological innovation, especially with respect
to developing countries, public research organizations are the prime movers. Following this
model, scientists undertake research and public extension services or private advisory firms carry
out the transfer technology. These roles remain compartmentalized and relatively static, even as
12
Adapted and drawn from World Bank 2006, pages 16 – 20.
14
the external environment undergoes change (for instance, as the private sector begins to
participate more). The innovation systems concept recognizes that: (1) there is an important
role for a broad spectrum of actors outside government (see Box 1); (2) the actors’ relative
importance changes during the innovation process; (3) as circumstances change and actors
learn, roles can evolve; and (4) actors can play multiple roles; for example, at various times
they can be sources of knowledge, seekers of knowledge, and coordinators of information
links between others.
5. Attitudes and practices determine the propensity to innovate. The common attitudes,
routines, practices, rules, or laws that regulate the relationships and interactions between
individuals and groups largely determine the propensity of actors and organizations to
innovate. Some organizations have a tradition of interacting with other organizations; others tend
to work in isolation. Some have a tradition of sharing information with collaborators and
competitors, of learning and upgrading, whereas others are more closed in this respect. Some
resist risk-taking; others do not. Table 1 gives examples of commonly encountered attitudes and
practices that affect the processes important to innovation.
Box 1. Small-scale equipment manufacturers and the adoption of zero tillage in South Asia
South Asia’s Indo-Gangetic Plains extend from Pakistan through India and Nepal to
Bangladesh. Zero-tillage practices are thought to offer environmental and economic advantages
for rice-wheat production systems in the Indo-Gangetic Plains. A consortium of research
organizations, led by the International Maize and Wheat Improvement Center (CIMMYT) and
Indian Council on Agricultural Research (ICAR), tested and modified zero-tillage approaches
used in other parts of the world to suit local conditions. Scientists and farmers concluded that
zero tillage might be an appropriate response to the high cost of preparing land and the
environmental problems associated with burning crop residues.
The technology did not really take hold, however, until researchers and agricultural engineers
from abroad began working with local, small-scale manufacturers to design prototype zerotillage seeders. Several modifications were made to the original design, and manufacturers now
produce and distribute a wide array of the new seeders. These small-scale manufacturers were
necessary for the local process of innovation to work effectively, which allowed a good idea to
grow into a profitable activity.
Farmers have rapidly adopted these practices since 2000. In 2004, a mission to evaluate the
Bank-funded National Agricultural Technology Project in India estimated that more that 2
million hectares of rice-wheat area were under zero tillage and that yearly savings in fuel and
water were on the order of US$145 million.
Source: NATP Implementation Completion Report (World Bank 2005)
15
Table 1. Attitudes and practices affecting key innovation processes and relationships
Innovation processes
and relationships
Interacting, knowledge
flows, learning
Restrictive attitudes and practices
-
Supportive attitudes and practices
-
-
Reactive planning
Mistrust of other organizations
Closed to others ideas
Secretiveness
Lack of confidence; excessive and
time-consuming documentation
Professional hierarchies between
organizations and disciplines
Internal hierarchies
Top-down cultures and bureaucratic
approaches
Covering up of failures
Limited scope and intensity of
interaction in sector networks
Exploitation
Suspicion/mistrust of private sector
Demand articulation
and inclusiveness of
stakeholders
-
Hierarchies
Top-down cultures and approaches
Non-representative governance
- Consultative and participatory
attitudes
- Representative governance
Risk-taking and
investing
-
Conservative, traditional
Maintain the status quo
- Confident, creative
- Experimental, testing
Incentives
-
Encourage risk-avoidance
Reward conformity with rules
Reward loyalty
Stable; depend little on performance
Reward preserving institutional
“turf” and privilege
-
-
-
Anticipatory planning
Trust, collaboration
Openness; transparency
Sharing, reciprocity
Confidence, decentralization
Mutual respect
Flat management structure
Reflection and learning from
successes and failures.
Proactive networking
Trust in research community
Teamwork
Private sector partnerships
Reward performance
Encourage risk-taking
Reward innovation and creativity
Encourage challenging the status
quo
- Reward networking and
partnerships
-
6. Interaction of behavioral patterns and innovation triggers. Attitudes and practices also
determine how organizations respond to innovation triggers such as changing policies, markets,
and technology. Because such attitudes vary across organizations and across countries and
regions, actors in different sectors or countries may not respond in the same ways to the same set
of innovation triggers. Interventions that seek to develop the capacity for innovation must
give particular attention to ingrained attitudes and practices and the way these are likely to
interact with and skew the outcome of interventions (Engel and Solomon 1997).
7. The role of policies. Government cannot create competitive firms, only firms can accomplish
this. But through its public policies government can influence the context and institutional
structures that surround firms. Thus, government’s most powerful roles are indirect rather than
direct (i.e., “steering”). It often takes a decade or more for the benefits of correct policies to be
manifest (Porter 1990: 623). Policy support of innovation is not the outcome of a single policy
16
but of a set of policies that work together to shape innovative behavior. In evaluating the
effectiveness of policies on innovative performance it is therefore necessary to be sensitive to
a wide range of policies that affect innovation over time and to seek ways of coordinating
them. Also, because policies and attitudes and practices interact, effective policies will take
account of existing cultural values and behavioral patterns (Mytelka 2000). For example, the
introduction of more participatory approaches to research is often ineffective unless scientists’
traditional attitudes regarding who is qualified to be a researcher – and the incentives that support
this belief system – are changed. Policies to promote innovation must be attuned to specific
contexts.
8. Inclusion of stakeholders and the demand side. The innovation systems concept recognizes the
importance of the inclusion of stakeholders and the development of behavioral patterns that make
organizations and policies sensitive to stakeholders’ agendas or demands (Engel 1997).
Stakeholders’ demands are important signals that can shape the focus and direction of
innovation processes. They are not articulated by the market alone but can be expressed through
a number of other channels, such as collaborative relationships between users and producers of
knowledge, or mutual participation in organizational governance (for example, board
membership).
9. Learning and capacity building. The attitudes and practices critical to innovation are
themselves learned behaviors that shape approaches and arrangements and are continuously
changing in both incremental and radical ways. These changes include institutional innovations
that emerge through scientists’ experimentation and learning, such as farmer field schools or
participatory plant breeding. Alternatively a company may start using research to gain an edge
over its competitors. Another example would be organizational learning to discover that
partnering is a key strategy for responding rapidly to emerging market opportunities. The new
ways of working that result from learning enhance the ability of organizations and sectors
to access and use knowledge more effectively and therefore to innovate. For this reason, the
capability to learn to work in new ways and to incrementally build new competencies is an
important part of innovation capacity at the organization and sector or systems level.
10. Changing to cope with change. The classic response of more successful innovation systems,
when faced with external shocks, is to reconfigure linkages or networks of partners (Mytelka and
Farinelli 2003). A new pest problem may require new alliances between scientific disciplines; a
new technology, such as biotechnology, could require partnerships between the public and private
sector; or changing trade rules and competitive pressure in international markets could require
new alliances between local companies and between those companies and research organizations.
It is impossible to be prescriptive about the types of networks, linkages, and partnerships that, for
example, agricultural research organizations will need in the future, because the nature of future
shocks and triggers is unknown and to a large extent unknowable. One way of dealing with this
uncertainty, however, is to develop attitudes that encourage dynamic and rapid responses to
changing circumstances—by building self-confidence and trust, fostering preparedness for
change, and stimulating creativity.
11. Coping with “sticky” information. A number of key insights discussed above emphasize that
innovation can be based on different kinds of knowledge possessed by different actors: local,
context-specific knowledge (which farmers and other users of technology typically possess) and
generic knowledge (which scientists and other producers of technology typically possess). In an
ideal innovation system, a two-way flow of information exists between these sources of
knowledge, but in reality this flow is often constrained because information is embodied in
different actors who are not networked or coordinated. In these circumstances, information does
17
not flow easily; it is “sticky.” A central challenge in designing innovation systems is to
overcome this asymmetry—in other words, to discover how to bring those possessing locally
specific knowledge (farmers or local entrepreneurs) closer to those possessing generic
knowledge (researchers or actors with access to large-scale product development, market
placement, or financing technologies). Ways of dealing with this asymmetry include:

Encouraging user innovation. For example, as the capacity of the private sector grows, the
private sector will undertake a greater proportion of innovation, because it possesses the
fundamental advantage of knowing the market.

Developing innovation platforms for learning, sharing, communicating, and innovating. The
structure of public research systems must adapt to permit a more open, thorough, and
multifaceted dialogue with other key actors identified in the innovation system analysis.

Investing in public research and advisory systems. Such investment must be based on careful
identification of knowledge demands and joint strategic planning with the multiple
stakeholders of the system.
18
Attachment 3
Preliminary List of Interview Questions
The interview guide would be structured to cover the following six areas of government
policy as it relates to agriculture, as identified in the review of relevant research. It would
focus on the main issues identified under each:

Education and human resources
o Supply and relevance of skilled human resources
o Government incentives for individuals to study and firms to train
o Quality of secondary and technical education

Creation of new knowledge
o R&D funding and priorities
o Competitive remuneration for public researchers
o Performance incentives for public researchers

Transmission and application of knowledge
o Extension and technical support services
o Intellectual property rights protection
o Media/communications policies on information access

Business and enterprise
o Specific trade promotion policies
o Legal guarantees for contracts and property
o Consistent enforcement of standards and regulations
o Innovations recently tried and adopted

Innovation finance, outputs and markets
o Tax incentives for technology upgrading
o Risk-sharing on experimental approaches
o Investment incentives

Interactions and linkages
o Government sponsored platforms, conferences, associations
o Government incentives for collaborative efforts
o Government facilitation of interactions, linkages and networks
o Membership in national, regional or international associations
An initial list of possible interview questions, organized under these six areas, is provided
below.
19
Education and Human Resources
1. How would you assess the ‘preparedness for work’ among recent university
graduates? Among polytechnic or technical college graduates?
2. Do you find that the education system fails to impart to graduates certain skills or
abilities that are required by your firm? If so, please give examples.
3. Do you find that the university system is remiss in providing certain types of
graduates that would be useful for your firm? If so, please give examples.
4. Does the government provide any incentives to firms like yours to accept student
work placements? What incentives?
5. Does the government provide any incentives to firms like yours to upgrade worker
skills through training or other investments in skills development?
6. To what extent do universities or technical institutes consult firms like yours in
setting their strategic priorities, or incorporate representatives from private enterprise
into their institutional governance bodies such as university councils?
7. What is the most common short-coming characterizing new graduates hired by your
firm?
Creation of New Knowledge
1. Do government research institutes consult firms such as yours in setting their research
priorities, or incorporate representatives from the private sector into their governing
boards?
2. Does your firm conduct any research ‘in-house’? If so, what type(s)?
3. Does your firm seek to innovate in any aspect of production or marketing? How does
it seek to do this? Does it invest in research?
4. What do you see as the main impediment to research activities within your firm?
5. Does the government provide any incentive or support for private sector research?
6. To what extent does government science and technology policy support the efforts of
private firms in the agricultural sector?
20
Transmission and Application of Knowledge
1. From where does your firm obtain new knowledge relevant to your business
operation and information on the market conditions which affect your firm’s
competitive performance? Are you satisfied with the availability of such resources?
2. What is your working relationship with public agricultural research centers in terms
of access to knowledge and information? What do you find to be the most useful
aspects of these relationships?
3. What is your working relationship with local or national universities in terms of
access to knowledge and information? What do you find to be the most useful
aspects of these relationships?
4. What is your working relationship with input suppliers in terms of access to
knowledge and information? What do you find to be the most useful aspects of these
relationships?
5. How do you find the advisory expertise necessary to diagnose problems that lie
beyond the technical capacities of your firm’s staff? Which organizations do you find
particularly helpful in this regard?
6. Does the government sponsor or facilitate agricultural expositions or other encounters
among representatives of the agricultural value chain at which information can be
shared and new ideas disseminated?
7. To what extent does your firm make use of information and communications
technologies (e.g., computers, cellular telephones, Internet access)? For what
purposes?
8. How does your firm organize itself to identify and learn from relevant experiences
elsewhere in the country, the region, or the world?
Business and Enterprise
1. Has your firm experimented with new ideas or the use of new knowledge during the
past year? For example, new crop variety or shipping techniques. How did it do this?
2. Has your firm experimented with new forms of organizing activities or procedures
during the past year? For example, new marketing arrangements or more efficient
product processing. How did it do this?
3. What do you see at present as the main impediments to improved productivity and/or
sales by your firm?
21
4. Does your firm feel that current legal guarantees provided for contracts, intellectual
property and physical assets are adequate? If not, what changes would be beneficial?
5. Do you feel that existing standards, and the enforcement of them, for weights, quality
or environmental safety are consistent and fairly enforced?
6. Do government trade policies and procedures help or hinder the business prospects
for your firm? Please explain.
7. How would you characterize the attitude of Ministry of Agriculture officials towards
the challenge of promoting technological change in agriculture? Is it resistant,
indifferent or supportive? What is your evidence for this conclusion?
Innovation Finance, Outputs and Markets
1. Do you feel that your country contains adequate mechanisms for the provision of
venture capital? If not, what might be done to improve this situation?
2. Does the government offer any particular incentives for firms like yours to update or
expand their use of technology (e.g., loan guarantees, fertilizer subsidies, equipment
subsidies, seed subsidies)?
3. Does government share the risks of new investments with firms in any way? How
so?
4. Does government financing for agricultural R&D encourage institutional
collaborations or partnerships of any kind? If so, please explain.
5. Does the tax system encourage or penalize experimentation and calculated risk taking
by firms? How so?
6. Does your firm cooperate with other firms or organizations in financing the
development and testing of new products, processes or technologies? If so, please
explain how this occurs.
7. How does your firm find the resources it needs to test and evaluate new ideas? Can
you give an example?
8. Does your firm invest in information technology and internet access? Do you think
this provides your firm with any particular competitive advantage?
22
Interactions and Linkages
1. Who are the main external actors that affect your firm’s performance and influence its
decision-making? Public sector? Other firms? Collective or business associations?
2. For each identified actor, (i) characterize its main role from the perspective of your
firm, (ii) assess its facilitating/impeding relationship to your business activities, and
(iii) evaluate its performance in supporting technical change and innovation.
3. Do you work in partnership with any other firms or agencies? Which ones? What
kinds of partnerships? Are these partnerships facilitated by any government
incentives or public agencies?
4. What is the frequency of your firm’s contacts with local government, national
parliament, and the Ministry of Agriculture? Who initiates these contacts? What is
their main purpose?
5. Do you participate in networks or maintain occasional communications with any
firms or organizations outside the country? If so, what is the main purpose of these
communications?
6. Does your firm participate in any business or collective associations? If so, what is
the main motivation for doing so?
7. Has the government established any new public agencies within the past year or so
whose mandate is to facilitate coordination and collaboration among various types of
organizations/firms engaged in the agricultural sector? If so, why were they created
and what is their purpose?
23
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