TP4 Flashcards
(19 cards)
Regulatory Instruments (Borrás & Edquist, 2013)
Direct – characterized by a concerted effort to design and implement regulations that have a positive affecting knowledge and innovative processes.
Indirect –regulatory instruments impact innovation, although they are not intended to do so (regulatory externality). For example, regulation forbids polluting waste or emissions, thus inducing or incentivizing product or process innovations.
Regulatory Incentives - Institutional endowment (Levy and Spiller, 1994)
Regulatory incentives only effective if regulatory governance has been established:
Hard – these variables include the nature of legislative and executive branches, administrative capabilities, judicial institutions.
Soft – these variables include customs, informal norms, social interests, and ideology
Regulatory Races
Race to the Bottom –a ‘prisoner dilemma’ type of constellation, propelling jurisdictions to adopt ever-decreasing standards to attract firms with mobility of production. Very lucrative to firms, maximize profits by transplanting jurisdictions, increase production, minimizing compliance costs “Delaware Effect” (Baldwin, Cave, and Lodge, 2012).
Race to the Top –dubbed the “California Effect” David Vogel which over time led to a harmonizing effect at the national level. The consumer plays a part increased consumer firms and industries will provide products that meet consumer needs and tastes.
Key takeaways of regulatory develoment in developing countries (Baldwin, Cave, Lodge, 2012)
(1) Transnational companies dominate the regulatory process,
(2) International organizations impose blueprints that can drastically shape institutions and other domestic structures,
(3) Domestic elite shape international pressure to suit their own self-interests
Limitations of institutions (Estache and Wren-Lewis, 2009)
Limited Capacity –state structure and the internal resources too limited to stand up to well-resources private interests, difficult secure and maintain well trained staff and bureaucracy that is capable of challenging market actors.
Limited Commitment –institutional factor, which illustrates that political systems are vulnerable to time inconsistency problems -shirk on their commitments, removing funding from regulators or force renegotiations in the case of contracts.
Limited Accountability –governments of developing countries face little demand for accountability or transparency, no political opposition, compounded by the nepotism strategically place or ‘elect’ relatives to positions of regulatory power.
Limited Fiscal Efficiency –unable to raise capital from taxes in order to provide access to essential infrastructure through subsidization and tax revenues. Sub-Saharan Africa population is unable to pay for infrastructure services (Baldwin, Cave, and Lodge, 2012).
Institutions perspective and results (Baldwin, Cave, Lodge, 2012)
(1) Institutions will not likely possess the sticking power needed to resist capture by industry,
(2) Institutions nearly impossible to withstand the political climate that include arbitrary interference and shirking of contracts and agreements,
(3) Institutions are not capable enough to provide effective regulation (Baldwin, Cave, and Lodge, 2012).
Resulting in:
(1) high probability of reduced investment,
(2) high probability of biased decision-making, and capture,
(3) outcomes will continue to operate at a sub-optimal level with respect to developmental outcomes (Baldwin, Cave, and Lodge, 2012, p. 415).
Approaches to applying policy tools (Reiss, 1984)
Compliance Approaches – involve enforcement strategies that focus on several measures falling short of prosecution to obtain compliance with the laws or regulations.
Weaknesses –compliance methods are indicative of capture and lack the necessary enforcement resources.
Strengths – First, efficient and cost-conscious utilization of limited available resources. Second, possible to achieve higher levels of regulatory compliance through less formal mechanisms, minimize government expenditure. Third, foster greater information flows between regulators and regulates. Fourth, compliance approaches are flexible make exceptions to rules when warranted – in opposition to deterrence approaches that apply uniform requirements irrespective if it makes sense (Baldwin, Cave, and Lodge, 2012).
Deterrence Approaches – are framed as penal utilize prosecution to deter actors, firms, or industries from future infarctions (Baldwin, Cave and Lodge, 2012, p. 239).
Strengths – first, extremely effective at changing corporate cultures. Second, gives rise to social disapproval, enhancing social pressures to comply. Third, firmer approaches provide rationale for firms to place compliance with regulation at a high priority (Baldwin, Cave, and Lodge, 2012, p. 240).
Weaknesses – first, courts rarely impose burdensome penalties, potential for creative compliance actions, shifting risk and/or blame to individuals or outsources business partners, evasion, concealment or non-cooperation.
DREAM framework (Baldwin, Cave, Lodge, 2012)
Enforcement pyramid (Baldwin, Cave, Lodge, 2012)
Definition of institutions
According to North the definition of institutions is more targeted identifying both form and informal institutions: “the formal rules (constitutions, statute and common law, regulations, etc.), informal constraints (norms of behaviour, conventions, and internally imposed rules of conduct), and the enforcement characteristics of each” (North, 1994).
Jugaad Innovation (Radjou et al, 2012)
Jugaad innovations offers affordable ‘good enough’ products geared toward consumers and
developing markets that are scarce of resources (Radjou et al., 2012).
In summation, jugaad innovations focus on providing solutions that reduce costs and resource usage whilst securing core functionalities and optimizing performance through great design (Radjou et al., 2012).
These innovations provide an optimal strategy to solve the ‘last mile’ issue in an innovative manner (Radjou et al.,2012).
In other words, it provides market solutions meeting Bottom of the Pyramid (BoP) consumer needs through value creation (Radjou et al., 2012).
One of the criticisms levied at jugaad innovations is that multi-national corporations (MNC) utilize this strategy in effort to exploit impoverished consumers and achieve greater market penetration in emerging markets (Knorringa et al., 2016).
Two approaches to governmental involvment in innovation (Warwick, 2013)
Laissez-Faire Approach – this approach states that in a virtually unrestrained market, a government should be a passive actor that is responsible for creating favorable “Framework Conditions” for business like predictable and transparent governance and macroeconomic stability (Warwick, 2013, p. 19).
Traditional Approach – this approach supports a more active intervention framework, through providing sector-specific subsidies, nationalization, government-driven mergers, or preferential procurement practices, underlining possible intersectoral linkages and knowledge spillovers (Warwick, 2013, p. 19).
3 Pillars of institutionalism (Scott, 2014)
a) Regulative (legally sanctioned)
b) Normative (morally governed)
c) Cognitive (recognizable taken for granted behaviours/ How we think and act)
Precautionary principle (Butenko and Larouche, 2015)
If there is a potential harm associated with a specific innovation or invention is great or irreversible, even if the probability is low, the invention of innovation ought not to be diffused unless proven to be safe (Butenko & Larouche). The European Commission used this in areas where insufficient or uncertain evidence followed by the production of initial evidence that raised ‘reasonable grounds for concern’ (Baldwin, Cave, Lodge, 2012, p. 94).
Strengths –minimize the potential harm, improve public support for regulation (Butenko & Larouche, 2015, p. 68).
Weaknesses – First, there is a potential for powerful groups to shape regulation in their favour. Second, high opportunities costs associated with exploring all risks. Third, it could have a detrimental impact on innovation by constraining innovation in general if it is applied to broadly and too often
The key debate – from a ‘strong’ definition any perceived risk automatic prohibition. From a ‘weak’ definition be allowed rather than required in case of doubt with respect to risks posed (Baldwin, Cave, Lodge, 2012, p. 95).
Key Examples – Food Saftey GMO’s, Artificial Intelligence, Environmental Damage, Threats to public health
BRAC
Background: Founded in Bangladesh by Fazle Hasan Abed, BRAC is the world’s largest NGO focusing on health, education, and financial inclusion.
What was done: Implemented large-scale solutions like the Oral Rehydration Solution (ORS) program, significantly reducing child mortality.
Relevant Concept: Frugal innovation—simple, low-cost solutions scaled effectively in resource-limited environments.
Relevant Concept: Institutional voids—filling gaps in formal healthcare infrastructure through grassroots, community-based models.
Relevant Concept: Iterative scaling and continuous improvement—BRAC’s emphasis on pilot-testing, evaluation, and refining programs.
India UID
Background: Aadhaar is India’s biometric-based digital identity system established by UIDAI to address inefficiencies in government subsidy schemes.
What was done: Implemented biometric-linked digital IDs for over 1 billion people, enabling direct benefit transfers (DBT) and reducing corruption.
Relevant Concept: Government innovation—systemic, scalable technological solutions to improve public service delivery.
Relevant Concept: Institutional voids—addressing absence of reliable identification systems crucial for service provision in emerging markets.
Relevant Concept: Regulatory adaptation—managing privacy and security issues through evolving legal frameworks and policies.
Azuri Technologies
Background: UK-based company providing solar-powered Pay-As-You-Go (PAYG) systems for off-grid communities in Sub-Saharan Africa.
What was done: Introduced affordable, solar home solutions using mobile money payments to enhance electricity access.
Relevant Concept: Frugal innovation—low-cost, scalable technological solutions addressing institutional voids.
Relevant Concept: Leapfrogging technology—bypassing traditional grid infrastructure through solar energy.
Relevant Concept: Public-private partnership potential—emphasizing the importance of supportive policies for mobile money and renewable energy adoption.
Zipline
Background: American company using autonomous drone technology to deliver medical supplies, notably in Rwanda and Ghana.
What was done: Established rapid, drone-based logistics systems reducing medical delivery times from hours to about 30 minutes in rural areas.
Relevant Concept: Technology leapfrogging—bypassing traditional road and logistics infrastructure challenges via drone technology.
Relevant Concept: Public-private partnerships—close collaboration with governments for regulatory support and health sector integration.
Relevant Concept: Regulatory innovation—navigating and shaping regulations to enable drone operations in healthcare logistics.
MItticool fridge
Background: Clay-based refrigerator created by Indian innovator Mansukhbhai Prajapati for rural, electricity-deprived households.
What was done: Developed an electricity-free, affordable cooling system using local materials and evaporative cooling.
Relevant Concept: Grassroots innovation—locally generated solutions tailored specifically to community needs.
Relevant Concept: Bottom-of-the-Pyramid innovation—affordable products designed explicitly for the poorest consumer segments.
Relevant Concept: Environmental sustainability—uses natural, biodegradable materials, promoting eco-friendly consumption patterns.
