Rethinking science, technology and innovation (STI) institutions in developing countries

Developing countries need appropriate science, technology and innovation (STI) policies in order to absorb, diffuse and master advanced knowledge that fosters growth. They also need them in order to nurture new dynamic sectors. In many developing countries, public expenditures on R&D are invested in university research and public laboratories. Industrial R&D is most often lagging behind, in spite of several government incentives. Business expenditures on R&D (BERD), as a consequence, are small in absolute terms and as a percentage of GDP The paper suggests that several factors explain this situation, including badly designed incentives, reduced government commitment to these incentives, lack of appropriate vertical STI policies, and high levels of causal ambiguity around specific policy incentives. This paper argues that increased government commitment, policy evaluation and the implementation of vertical STI policies aimed at creating new sectors can solve the technological stalemate.