Innovation Policy and the Competitiveness of Less Developed Countries

Abstract

In Chapter 4, we examined some of the sources of competitiveness of MNEs. In this chapter, we consider some of the sources of competitiveness of nations and suggest public policies that can improve this competitiveness in the case of less developed countries (LDCs). In Chapter 7, we will investigate through fieldwork the extent to which these various policies are being applied in Brazil and Chile, we will point to the insufficiencies of Brazilian and Chilean policies, and we will make some suggestions for their improvement. We begin by reviewing the existing indicators and models of national competitiveness. We then investigate how innovation policy1 can promote the creation and diffusion of competitiveness. We describe the range of available instruments for implementing an innovation policy for LDCs and the different models of innovation policy. Next, we consider innovation policy within the broader context of industrial policy. Finally, we focus on two key areas for innovation policy: network formation and technological parks.