Reframing the “Innovation Turn” in Development Strategy

Innovation has returned to the center of development thinking. Faced with climate pressures, energy transitions and rapid digital change, policymakers are placing their bets on technology. From solar photovoltaics to artificial intelligence, innovation is presented as the engine that can deliver growth, sustainability and competitiveness all at once. The message is appealing: Invest in new technologies and development will follow. 

This narrative, however, oversimplifies how development actually happens. Innovation can certainly support progress. It can raise productivity, open new industries and help economies move toward low-carbon pathways. For countries in need of latecomer development, technological shifts can create new opportunities. Yet the leap from innovation to development is not automatic. Too often, policy debates blur the distinction between technological change and structural transformation. 

Development is not just about new ideas or new technologies. It is about shifting resources into more productive activities and, crucially, about building capabilities within firms, workers and institutions. Innovation only contributes when it is firmly embedded in these processes. Without that, it remains isolated. New technologies may be adopted, but cannot alone transform the economy. 

This matters because much of today’s innovation agenda focuses on visible outputs, with a strong emphasis on entrepreneurship, SME startups and innovation hubs. These are easy to measure and politically attractive. But they say little about whether firms are learning, whether industries are upgrading or whether economies are becoming more productive. The risk is a form of “tech solutionism”, where technology is treated as a shortcut to development. 

What innovation really looks like 

On the ground, especially in developing countries, innovation rarely takes the form of frontier breakthroughs or vanguard technologies. It is more often incremental, practical and adaptive. Firms adjust production processes, combine existing technologies in new ways and find solutions that fit local constraints. This is where most learning actually happens. 

These forms of innovation tend to be undervalued. Policy agendas often favor high-tech sectors and advanced research, even when the foundations for such activities are weak. As a result, support is directed toward areas that are disconnected from the realities of production. The everyday innovation that sustains firms and builds capabilities receives far less attention. 

This disconnect has consequences. Initiatives that focus on startups without an industrial base, or on importing technologies without building local skills, often struggle to take root. In other words, innovation does not work as a plug-and-play solution. It depends on how firms, universities, governments and financiers interact – and on whether technologies are adapted and used in practice. 

Reframing the innovation turn 

There is also a deeper risk. If innovation is pursued without attention to capabilities, it can reinforce existing inequalities. Advanced technologies are concentrated in a few countries and many others risk being confined to low-value roles. Participation in new industries does not automatically lead to upgrading. Without deliberate efforts, it can lock economies into dependence on imported technologies and external knowledge. 

The challenge, then, is not simply to promote more innovation, but to rethink how it is linked to development. This broader perspective is explored in specific domains across this special feature. Contributions by colleagues and emerging scholars active in the African Network for Learning, Innovation and Competence Building Systems (Africalics) and the South African Research Chair in Industrial Development (SARChI-ID) examine how innovation unfolds across different sectors and systems. 

In agriculture, climate-smart and digital technologies hold considerable potential, but their impact depends on access, affordability and complementary infrastructure, particularly for smallholders. Moving beyond individual technologies, the analysis of agricultural innovation systems highlights how weak coordination between actors, short-term project logics and institutional discontinuity prevent innovation from diffusing and delivering sustained productivity gains. 

In the energy domain, the rapid expansion of renewable technologies reveals a similar pattern: Without deliberate efforts to build domestic capabilities, foster local ownership and ensure inclusive participation, technological change risks reinforcing dependency rather than enabling transformation. 

At the firm level, local enterprises play a key role, but the wider effects of projects and programs do not materialize on their own. Innovation is shaped less by the sheer availability of capital than by how finance is structured and aligned with long-term industrial development. Where finance is short-term, fragmented or poorly matched to productive needs, even promising activities struggle to scale. 

Taken together, these contributions reinforce a common message: the main constraints to development are not the absence of innovation, but the absence of alignment between technologies, capabilities, institutions and production systems. Innovation only becomes developmental when it is embedded in these broader processes of learning and structural transformation. 

Innovation policy therefore needs to be grounded in the realities of production and learning. It should focus on helping firms build capabilities, supporting industries where countries can realistically compete and ensuring that technologies are embedded in local systems. 

Make no mistake: Innovation lies at the heart of economic development. It will be central to shaping the industries of the future, while addressing climate change and other societal challenges. But it is not a shortcut. Development requires a slower, more demanding process of structural transformation. The real task is to connect innovation to that process. Only then can it support growth that is not just faster, but more inclusive and sustainable. 

Rasmus Lema 

Rasmus Lema is a Professor at the University of Johannesburg and South African Research Chair in Industrial Development. He is also a Professorial Fellow at UNU-MERIT and Editor-in-Chief of Innovation and Development. He holds a DPhil in Development Studies from the Institute of Development Studies (IDS), University of Sussex, UK. His research focuses on industrial development, innovation and sustainability, with particular attention to green and digital transformations in the Global South.