Industrial and innovation policies in times of crisis: a widening technological divide?

Abstract

Purpose The purpose of this paper is to analyze the ongoing revival of industrial and innovation policies across developed and developing economies. Design/methodology/approach The paper compare the scale and scope of recent industrial and innovation policy initiatives across developed and developing economies. Also, it analyzes recent data regarding R&D investments and other innovation indicators. Findings There are enormous disparities across economies in their capacity to implement industrial policies, particularly those to support science, technology and innovation. Most developed economies, and a few developing economies, are implementing bold, ambitious and medium-term innovation policies towards bolstering R&D investments, supporting advanced manufacturing and green energies and strengthening technological capabilities. Amid lack of fiscal policy space and vulnerable debt sustainability positions, institutional deficiencies and weak innovation ecosystems, developing economies – particularly in Africa and Latin America – face enormous challenges to implement strategic industrial and innovation policies. Research limitations/implications Under the current economic, financing and institutional conditions, together with subdued global trade and ongoing geopolitical fragmentation, the technological divide and innovation asymmetries across economies will likely widen even further, paving the ground for a “development divergence” in the coming decade. Originality/value The paper analyzes the implications of the current industrial and innovation policy trends across developed and developing countries. Under the current economic, financing and institutional conditions, together with subdued global trade and ongoing geopolitical fragmentation, the technological divide and innovation asymmetries across economies will likely widen even further, paving the ground for a “development divergence” in the coming decade.