Contributions and challenges of linking approaches

It is crucial at this juncture to consider how the economic focus on innovation and the ethical need for human development can be brought together. The innate logic is that the business world and advanced economies put emphasis on innovation and economic competitiveness, whereas social scientists and development researchers aim to promote global justice and human well-being. However, it seems necessary to bring these camps together to tackle systemic inequality reproduction, prevent social instability and create widespread social and economic welfare. Without economic development, it seems difficult for income-poor countries to establish widespread social security and a welfare system. At the same time, without a well-educated, healthy and creative population, it seems difficult to promote innovation and maintain long-run economic development. Consequently in recent decades, new approaches have been emerging that aim to bring the two camps together and try to understand the complex relations between innovation, economic and human

development, deliberately considering ideas from both Amartya Sen and Joseph Schumpeter. Probably the most important are:

• social entrepreneurship (e.g. Bornstein 2004; Yunus 2007);

• making technology work for human development (e.g. UNDP 2001;

Oosterlaken and Hoven 2012; Oosterlaken 2013);

• systems of innovation and development (Johnson et al. 2003; Arocena and Sutz 2005; Lundvall et al. 2011; Capriati 2013); and

• evolutionary welfare economics (Binder 2010; Schubert 2012).

The first two rather practice-oriented approaches have affected the lives of mil-lions of people around the world; the last two are promising approaches for gaining a better understanding of the relations between innovation economic and human development and therefore creating more systemic policies that bring innovation, economic growth and human development together. Some core strengths and weaknesses of these new approaches are discussed in the next section.

3.2.1 Contributions

Perhaps the best example of where the thinking of Sen and Schumpeter are real-ised in practice is in the area of social entrepreneurship. Social entrepreneurs aim at introducing social innovations such as microfinance or new organisation of activities (education, health, democracy) that empower people and contribute to their human capabilities and societal welfare. The idea of social entrepre-neurship has attracted the attention of many policy makers, academicians and entrepreneurs around the world, as demonstrated by the existence of organisa-tions such as Ashoka, the Skoll Foundation and the Schwab Foundation for Social Entrepreneurship that support social entrepreneurs. Probably the most famous social entrepreneur is Muhammad Yunus (along with the Grameen Bank) who was behind the microfinance revolution, providing poor people in developing countries with the relatively small amount of financial means they need to get their own businesses started (Yunus 2007). Global companies and management journals highlight innovations from which companies and people in developing countries can benefit and local innovators can become empowered. New con-cepts such as social businesses, reverse innovation and frugal innovation, which aim to learn from and empower clients from less developed regions, have also received much attention (Hart 2010). Increasingly, global innovation processes originate from the findings in developing markets, and huge companies create products adapted to less developed settings. Chapter 6 will examine the concept of social entrepreneurship (which intrinsically combines innovation and human development) in more detail.

Another approach that can make substantial contributions to human agency and welfare is deliberately taking human development expansion into technol-ogy design (Oosterlaken and Hoven 2012; Oosterlaken 2013). This has the goal

of making technology work for the poor (UNDP 2001). Famous examples and initiatives are the US$100 computer for the poor, and the creation of medicines for diseases widespread in developing countries.

It is important that the poor in developing countries become not only the recipi-ents of technologies developed in the North, but also have the capabilities to actively contribute to the innovation processes, shape technologies according to their needs and build up their own innovation capabilities to solve problems and innovate (Juma et al. 2001; Srinivas and Sutz 2008). This later perspective links with initiatives to combine the innovation system approach with Sen’s human capabilities approach (e.g. Johnson et al. 2003; Arocena and Sutz 2005; Capriati 2013). The emphasis is on the promotion of learning capabilities as a crucial factor for the freedom of the people. Several researchers from Globelics emphasize that in establishing prolific innovation system in developing countries, as well as high-tech R&D and technology, focus must be placed on basic needs and human capability to promote learning and innovation capabilities. For this reason, prolific institutions are required to promote interactive learning and innovation for both economic competitiveness and human development.

Another valuable approach has been made by a group of researchers from the Max-Planck Institute for Evolutionary Economics, who aim to introduce a dynamic perspective into welfare economics which takes into account the fact that preferences and needs of people substantially change over time (Binder 2010;

Schubert 2012). They show, for instance, how different human capabilities, such as education and health, co-evolve over time (Binder and Coad 2010a, 2010b) and how innovation should address changing consumer needs (Schubert 2012).

All of these approaches make essential contributions in bringing innovation and human development together. They all take different but valuable perspectives, but of course they also have their shortcomings and weaknesses, and can, there-fore, learn from each other.

3.2.2 Challenges

Despite the fact that within each specialised field there is a growing number of people working on issues combining innovation and human development, it is not that uncommon for researchers from one approach to be unaware that researchers from another approach are working on similar topics. Unfortunately there seems to be insufficient direct interaction between the innovation economics and human development research communities, interaction such as the leading scholars of one approach participating in the conferences of the other, or the production of joint publications. There are several reasons why integration of and interaction between the approaches is difficult. First of all, each specialised research commu-nity has different core goals and scientific terminologies that can paradigmatically lead researchers in different directions to address different concerns. By defini-tion, the core of innovation economics involves innovation and technological capabilities of companies, whereas the core of the human development approach

is on inequality of the capabilities and well-being of people. There is also an additional communication problem caused by specialized language and concepts, which can be misunderstood, misinterpreted, or not understood at all. A typical example of a term which can easily be misunderstood or misinterpreted is each approach’s use of the word ‘capabilities’. In innovation economics it refers to skills and technological capabilities, but in the human development approach it refers to the abilities and freedom to choose. It must be emphasized that the main subjects in human development approaches are people, their life quality and choices, whereas in innovation and structural economic change approaches the focus is rather on companies, universities and economic policies. There is certainly an overlap, but naturally the interrelations between innovation, struc-tural change and human development are complementary, rather than core topics within the specialised fields.

This leads to a difficult question: should a ‘Sen meets Schumpeter’ approach be embedded within an existing research community (e.g. innovation systems, human development or welfare economics) or should it should form its own interdiscipli-nary research community and workshops with good ties to all fields, to prevent to natural gravitation towards the core focus of each specialised approach on either innovation and economic development on the one hand, and human capabilities and well-being on the other? Forming such a research community might also pro-vide the possibility of a ‘Sen meets Schumpeter’ approach evolving from a niche approach within their individual fields to form a higher, aggregated discussion, contributing to the understanding of the complex relations between economic and human development. While being a widespread phenomenon in the real world, where ideas of innovation, income, jobs, well-being and inequality often go hand in hand in complex societal, political and economic debate, there are significant degrees of specialization within different approaches to development. Arguably, the ‘Sen meets Schumpeter’ approach and initiatives such as STEPS, Globelics, evolutionary welfare economics, or technology and design for human development all provide inspiring new ideas and can contribute to the task of bridging the ideas of innovation economics and the human development approach; nevertheless, it seems necessary to form more joint working groups, journals and conferences.

Despite all of the potential integration problems, there is great potential for inte-gration facilitating new theoretical insights, which are all the more important for being highly relevant in practice, such as in promoting productive local develop-ment projects or designing industrial policies that bring economic growth and human development together. There is a need to develop a better understanding and promote public discussion on how economic and human development policies can complement each other and how they are not necessarily contradictory – for example, by creating pathways that take public discussions away from the idea that austerity, macroeconomic and economic efficiency on the one hand are diametri-cally different from discussions about human rights, poverty and lost generation on the other, towards how and which innovation and structural economic reform promoting new sectors can contribute to economic growth, job creation and human development.

3.3 Using complexity thinking to create bridges: Networks,