The diffusion of innovation in Low Income Countries

Dr Xiaolan Fu, University of Oxford

Start Date:  Sep 2012 |   End Date: Feb 2016

Project webpage
Research Councils UK project page

Film: Innovation in LICs
Report: Innovation in low income countries: A survey report
Journal article: Information Sources, ICTs and Price Information in Rural Agricultural Markets
Journal article: Drivers of Export Upgrading
Journal article: Transaction Costs, Information Technologies, and the Choice of Marketplace among Farmers in Northern Ghana
Journal article: Complementarity between in-house R&D and technology purchasing: evidence from Chinese manufacturing firms
Working paper: Innovation Under the Radar in Low Income Countries: Evidence from Ghana
Working paper: The diffusion of innovation in the private sectors in Low-income Countries (LICs): A systematic literature review
Working paper: Multi-dimensional Complementarities and the Growth Impact of Direct Investment from China on Host Countries
Working paper: Complementarity between internal knowledge creation and external knowledge sourcing in developing countries
Presentation: The Diffusion of Innovation in Low Income Countries
Working Paper: The Impact of China-Africa Trade on the Productivity of African Firms: Evidence from Ghana
Working Paper: The Innovation Effects of ICT adoption in Ghana
Working Paper: Innovation, informality, and firms' growth in low-income countries
Working Paper: Productivity convergence and exporting
Journal Article: Chinese MNEs and managerial knowledge transfer in Africa: the case of the construction sector in Ghana
Journal Article: The creation and diffusion of innovation in developing countries: a systematic literature review






Technological innovation is a key element of industrialisation and catch-up in developing countries. Since innovation is costly, risky and path-dependent, ground-breaking innovation is highly concentrated in a few rich countries and amongst a small

number of firms. Foreign sources of technology account for a large part of productivity growth in most countries. If foreign technologies are easy to diffuse and adopt, a technologically backward country can catch up rapidly through the acquisition and more rapid deployment of the most advanced technologies (Eaton and Kortum, 1995; Bell and Pavitt, 1993).

Therefore, the development process in low income countries can be supported by tapping existing knowledge and know-how. The transfer, adoption and adaptation of knowledge to low income countries hence constitutes an important issue for economic growth and global development.

Technology diffusion and adoption relies on substantial and well-directed technological efforts (Lall, 1992) as well as sufficient human and financial resources and absorptive capacity (Cohen and Levinthal, 1989). It requires appropriate institutions and policies to incentivise and facilitate the process in addition to strong local capabilities to identify the right technology and appropriate transfer mechanism, and to absorb and make adaptations according to local economic, social, technical and environmental conditions (Fu, et al., 2011). 

This research project will explore determinants and transmission channels for effective innovation creation, diffusion and adoption in LICs under institutional, resource and affordability constraints. In particular, it looks at:

  • The barriers to innovation creation and diffusion in LICs under institutional, resource and affordability constraints and the space for innovation policy;
  • The determinants of knowledge diffusion in LICs from leading innovators to latecomers, in particular the role of university-industry linkage and inter-firm networks;
  • The effect of external knowledge diffusion to LICs, in particular the productivity impact of South-South trade and FDI with a special focus on Chinese trade and FDI in Africa;
  • Develops an SME open innovation network model to increase frugal innovation for the poorer societies in LICs.