Dan Breznitz offers a wealth of sobering lessons on innovation and development. One stands out in particular: don’t be dazzled by glamour. He urges us not to succumb to the “techno-fetishism that equates innovation with high-tech industries, start-ups, and new products.” In fact, he points out, innovative activities that create inclusive growth and mass employment for workers at all skill levels—not just engineering whizzes and financial wizards—are not the ones that “inspire awestruck media coverage.” It is rather the unglamorous types of innovation, Breznitz argues, that “are the unsung heroes of economic growth and improved welfare.”
I agree—and indeed, we should take Breznitz’s argument even further. Besides recognizing the great contributions of humble varieties of production innovation, we should also acknowledge and nourish innovation by non-elites, whether it is in creating a new business, inventing ways to get around rigid regulations, delivering essential services under dire constraints, or solving problems in general. Discourses on innovation often suggest that only the rich, urban, highly educated, and technologically advanced are capable of innovation. Have you heard of farmers in developing countries being described as “innovative,” for example? Judging by graduate syllabi on the political economy of development at leading universities, non-elites can be recipients of foreign aid or victims of corruption and conflict, but not agents of innovation. Yet the reality is that they innovate all the time—they must, in order to survive.
Consider a classic debate in development: Is it economic growth that leads to good, strong governance, or vice versa? Luminaries have staked their positions on opposite ends of this debate, with modernization theorists insisting that growth comes first and institutionalists asserting that it is the other way around. But neither group can explain how economic growth or good governance—which are mutually dependent—arise in the first place. In Why Nations Fail (2012), Daron Acemoglu and James A. Robinson “solve” this chicken-and-egg problem by arguing that good governance results from historical legacies. That is why, they conclude, “it is so difficult to remove world inequality and to make poor countries prosperous.” The upshot is clear: countries that inherit a bad history have no way out.
The truth is both less damning and less glamorous. The first step of transformative change, my research finds, is surprisingly simple yet widely overlooked: I call it “using what you have”—local actors using indigenous resources and local knowledge to kick-start entrepreneurial activities or solve problems. In China, for example, during the launching phase of market reform, local bureaucrats turned a preexisting communist, personal-networks-intensive bureaucracy into an investment recruitment machine. In Nigeria, during the 1990s and 2000s, filmmakers partnered with locally embedded “marketeers” who simultaneously pirated and distributed their movies widely—giving rise to Nollywood, which today is Nigeria’s second-largest export sector after oil. In Ethiopia, an orphan farmer named Aba Hawi inspired a social movement in his impoverished village to build mini-dams manually and revive traditional conservation techniques. He became so successful that government authorities invited Aba Hawi to advise other villagers on regenerating their lands.
Breznitz defines innovation as “the act of applying ideas to offer new or improved products and services in any stage of production.” But we need not restrict our attention to the context of production—that is, to manufacturing. The examples I have given in China, Nigeria, and Ethiopia are also expressions of innovation: actors offering new administrative arrangements, new distribution channels, and new conservation paradigms. More specifically, they are all “improvising”—making creative use of what exists in their environments to solve problems, rather than copying solutions from the rich.
In China, commercial innovation provides still more illustrations of “using what you have.” Companies in the Pearl River Delta did not start out with Silicon Valley’s advantages of cutting-edge science and lavish venture capital, but they were nimble, had access to a gigantic domestic market, possessed extensive local knowledge, and could operate with low costs. Parlaying these features into strengths, they focused their innovation on what they did best: making things cheaper and faster. Alibaba did not push its formidable Western competitor eBay out of the Chinese market because it was anointed a national champion. Rather, Alibaba religiously tailored its services to Chinese consumers, whereas eBay stuck to the model of global multinational corporations. It was by leveraging local knowledge, not by winning the favor of the state, that Alibaba won out. Innovating first in areas of comparative advantage (e.g., e-commerce and assembly) gave the top players a solid base to subsequently move into first-generation innovation such as applied artificial intelligence.
Building new markets is not the same as expanding and sustaining them, however. Despite lacking ideal conditions, non-elite actors do innovate and create vibrant businesses in emerging economies. But for these pockets of entrepreneurship to sustain and scale up, they need government investment, or what Breznitz calls “an array of public and semi-public goods.” This ranges from traditional public goods like electricity grids and regulations to semi-public goods such as subsidized loans for entrepreneurs. What distinguishes China from other emerging markets is not the presence of bottom-up innovation, but the availability of government support to scale up innovation nationally.
Putting all this together, there are two striking flaws in mainstream political economy of development. The first is a lack of appreciation for innovation among ground-level actors, particularly in developing countries. Too much attention is placed on structural forces, colonial legacies, foreign aid, and Western policy prescriptions—with literature on elite politicking in seventeenth-century Western Europe still held up as indispensable for explaining contemporary development. It’s time to bring creativity among ordinary people into the picture, and we must also update our clock to reflect twenty-first-century disruptions and shifting globalization patterns. As Breznitz’s account suggests, even with “good governance” and ideal growth fundamentals in place, there are still multiple paths to innovation to choose from, which can lead to divergent social outcomes.
The second flaw is a failure to distinguish between the factors and institutions that help markets take off and those that sustain them. Conventional wisdom centers on the first-world market-sustaining institutions (e.g., formal checks on state power, technocracy, private property rights, and best practices), positing them as universal prerequisites for growth. This narrow focus obscures the fact that the methods for building new markets may not only be qualitatively different from but may often defy first-world norms.
Once at a talk, an academic told me that “using what you have” is an unsatisfying observation because it sounds too simple; he expected something fancier. That is privilege speaking. Acts of bottom-up innovation in the developing world are ignored in the way we normally think about how development happens. Any program for local and inclusive prosperity must reject the fallacy of dismissing that which seems humble as inconsequential. For as Breznitz reminds us, it is the unglamorous forms of innovation that have made a real difference to huge numbers of people around the world.
In sum, innovation is not just for elites. The poor and rural innovate all the time, using what they have. Elites who wish to lend a helping hand should take this reality seriously.