The Innovation Imperative for Developing East Asia

After a half century of significant economic success, developing countries in East Asia are confronted by slowing productivity growth, increased fragility of the global trading system, and rapid changes in technology which are threatening their main engine of growth: export-oriented, labor-intensive manufacturing. Longer-term demographic shifts, climate change, and the ongoing COVID-19 pandemic are increasing economic vulnerability. Against this background, The Innovation Imperative in Developing East Asia examines the role of innovation in fostering future economic progress in the region. A central finding of the report is that the countries' innovation institutions and policies are not aligned with their firms' innovation capabilities and needs. To enable greater innovation-led growth, policies need to support technology diffusion, not just invention, and innovation in services, not just manufacturing. Efforts are also needed to strengthen key complementary factors for innovation, including firms' managerial capacity, workers' skills, and risk finance--