Fostering innovation in less-developed and low institutional capacity regions

This paper employs the neo-Schumpeterian framework to examine innovation policy variations stemming from technological disparities among countries and regions. Focusing on less developed areas with limited institutional capacities, it highlights the challenges in crafting effective innovation policies. Emphasizing non-R&D knowledge activities and the blending of own and imported knowledge, it advocates for a broader policy scope beyond R&D. Given low implementation capacity, it suggests tailored approaches over 'best practice' solutions. Addressing accountability concerns, it proposes 'action learning' and 'learning networks' as governance mechanisms. Additionally, it underscores the role of technology transfer via Global Value Chains (GVCs) in upgrading technology and proposes a European GVC-oriented industrial innovation policy to mitigate regional imbalances.