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Entrepreneurship and Innovation in Developing Countries : How the ITA can help

Entrepreneurship and Innovation in Developing Countries : How the ITA can help. Bruno Lanvin, the World Bank. WTO, Geneva – 18 October 04. IT and development. Globalization Entrepreneurship, innovation and growth Efficiency and transparency Regulatory and legal framework

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Entrepreneurship and Innovation in Developing Countries : How the ITA can help

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  1. Entrepreneurship and Innovation in Developing Countries : How the ITA can help Bruno Lanvin, the World Bank WTO, Geneva – 18 October 04

  2. IT and development • Globalization • Entrepreneurship, innovation and growth • Efficiency and transparency • Regulatory and legal framework • Issues and challenges ahead

  3. IT and development • Globalization • Entrepreneurship, innovation and growth • Efficiency and transparency • Regulatory and legal framework • Issues and challenges ahead

  4. Engines of globalization

  5. Four Ways of Being Global (2003) Source: Foreign Policy and A.T. Kearney

  6. Is Globalization Slowing Down? Globalization advanced briskly until 1997, when the financial crises that hit various developing regions weakened trade flows and undercut gains in global integration. So why did overall integration still increase during this period? Simple: Technology has become the engine of globalization. Technology factors: Percentage of population online, number of internet hosts per capita, and number of secure servers per capita Non-technology factors: Trade in goods and services, capital flows, and personal contact. Source: Foreign Policy and A.T. Kearney

  7. IT and development • Globalization • Entrepreneurship, innovation and growth • Efficiency and transparency • Regulatory and legal framework • Issues and challenges ahead

  8. Obstacles to entrepreneurship in DCs Source: World Development Report, 2005 (World Bank)

  9. Source: World Development Report, 2005 (World Bank)

  10. Source: World Development Report, 2005 (World Bank)

  11. Sources of growth • Growth in inputs • Efficiency in factor allocation • Innovation (useful knowledge) • Vehicles (trade, FDI,..) • Cross-border education • etc …

  12. Growth, Innovation, Enterpreneurship Regulatory Competition Framework Monetary & Fiscal Policies Domestic Governance Macro- Economic Policies Growth Rule of Law Corruption Domestic savings IPRs Capital Formation Entrepre neurship Innovation T of Tech Openness F.D.I. Trade Policy Global Reach Exports International competition External Niches & Alliances

  13. The crucial role of innovation • Technological innovation • Disruptive vs incremental ? • Individual vs collective • Process innovation • Non technological innovation • Shifting value along the chain

  14. Source: World Development Report, 2005 (World Bank)

  15. IT and development • Globalization • Entrepreneurship, innovation and growth • Efficiency and transparency • Regulatory and legal framework • Issues and challenges ahead

  16. IT and development • Globalization • Entrepreneurship, innovation and growth • Efficiency and transparency • Regulatory and legal framework • Issues and challenges ahead

  17. Strong Public Sector 2 R = 0.3991 y = 0.6839x + 1.9399 7.00 FIN SWE GER USA UK CHL AUT CAN HKG NOR DOM FRA 6.00 SIN ITA SWI POR ICE NET First circle (top performers) TAI BRA ELS KOR AUL VEN NWZ DEN ARG BEL SPA BUL SLK ISR EST 5.00 JAP LUX INI PHI HUN JOR Second circle (the contestants) IRE EGY SRI MLT THA CZE GRE PER GUA Facilitators INO 4.00 JAM PAN URU MEX TUR BOL RUS VIE POL CHN LAT ROM ZIM UKR 3.00 PAR COS LIT SAF NIC COL SLV Third circle (ready or not) BAN NIA TRI ECU HON 2.00 MAU 8.00 2.00 3.00 4.00 5.00 6.00 7.00 Leaders Source : World Economic Forum/INSEAD/infoDev Note : the ‘Government’ variable of the GITR index has been used as proxy for Government leadership (x), whereas ‘Competition in telecoms’ has been used as an indicator of the effectiveness of Governments as facilitators (y)

  18. Multi-purpose ITThe example of trade facilitation • Trade competitiveness • Attraction of FDI • Governance (transparency, accountability,..)

  19. Potential for additional off-shoring ? • In G-7 countries, 1-5% of active population could be affected (World Bank 1995) • Maximum number of current jobs affected in US: 14 mn (Bardhan and Kroll 2003) • Projected number of US services jobs outsourced by 2015 : 3.4 mn (Forrester 2004) • In financial services alone, 2 mn jobs could be affected during the next 5 years (Deloitte & Touche 2003) • 70% of the biggest 1000 firms have not outsourced services jobs towards lower-cost countries • Delayed cost-savings measured are estimated at 20-40% Source : World Investment Report, 2004 (UNCTAD)

  20. IT and development • Globalization • Entrepreneurship, innovation and growth • Efficiency and transparency • Regulatory and legal framework • Issues and challenges ahead

  21. How can ITA help ?How is 2004 different from 1996 ? • Globalization becoming information-centric (competitiveness, efficiency, governance) • Life-cycle of IT products becoming shorter (=> lesser tolerance to procedural obstacles) • Mainstreaming of IT as a development tool (DOT Force, MDGs, WSIS) • Proper regulatory and legal frameworks have proved their power to bring prices down internally • ITA can contribute to turn all of the above into powerful instruments for development

  22. Merci blanvin@worldbank.org

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