Investment in innovation stands not only for technological improvements but also organisational changes, be it in relation to products, processes, or services. The private financial system may fail to finance such investment projects with high social return (above the social cost of capital), with potential opportunity for National Development Banks (NDBs) to intervene with programs to support such financing. It is however important to recognize that investments in innovation projects have several distinctive characteristics requiring specific NDB capabilities to play its role within the system of national innovation policies. The focus of this project is on such capabilities particularly for NDBs in Latin America and the Caribbean (LAC).
The project team led by Dr Marco Carreras at the Institute of Development Studies, involves Professor Stephany Griffith-Jones, Professor José Antonio Ocampo, Dr. Jiajun Xu and Dr. Anne Henow. The research aims to understand the capabilities that NDBs need in order to successfully address market failures inhibiting the financing of innovation projects of high social return. A specific objective will be to derive policy conclusions on the key capabilities that NDBs in the LAC region need to acquire at this point in order to make progress towards successfully financing innovation projects. Key activities include case studies, 4 within LAC countries (Brazil, Chile, Colombia, Mexico) and 3 outside LAC countries (France, China and South Korea). The research and reports will be presented at various workshops and published online.