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Diversification and Economic Development: Insights from the WIPO “Making Innovation Policy Work for Development” Report 2024
- The World Intellectual Property Organisation (WIPO) published a report titled “Making Innovation Policy Work for Development” on economic diversification for increased utilization of knowledge and eventual economic prosperity.
- The report argues that bridging the gap between high-income and low-income nations requires economies to boost innovation by building, diversifying, and applying knowledge embodied in technology.
- Over-reliance on specialization can make economies vulnerable to external disruptions; diversification helps by venturing into new sectors or activities that complement a nation’s current strengths.
- India has advanced significantly in the past two decades, with scientific capacities increasing from 42% to 68% and technical capabilities from 9% to 21%.
- Two important factors that inform the process of diversification are innovation complexity and relatedness, with relatedness indicating the desired incremental nature of diversification.
- India’s motorcycle industry serves as a success story of diversification, primarily linked to the capabilities developed in the related bike, aviation, and automobile sectors.
- The report highlights the potential for India’s electric vehicle development, with forecasts predicting a 50% rise in two-wheelers and a 70% rise in three-wheelers by 2030.
- While diversification is critical for growth, the report may overestimate the ease with which nations can overcome hurdles, especially low-income nations, to diversification.
- The report could benefit from a deeper analysis of how socioeconomic and infrastructural disparities affect a country’s ability to implement recommended policies.
- In conclusion, policymakers must remain mindful of unique local contexts encountered by economies at different phases of development to drive sustained global economic growth.
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