Innovation & Entrepreneurship

CONTEXT

The job creation challenge is immense. 28 million jobs will be needed each year in Sub-Saharan Africa and South Asia alone to employ the growing number of youth entering the working age population. This requires a substantial increase in both wage employment and entrepreneurs. And raising the productivity and growth of firms is key for generating more and better jobs over the long run. The importance of a vibrant private sector in creating jobs and addressing developmental challenges is well recognized both within the World Bank Group and among our client countries. Our client countries, for example, spend millions of dollars on SME development programs but there are numerous challenges in making such investments effective and to this end, policy choices must be evidence-based.

What difference does firm dynamism make to jobs and economic transformation in developing countries? What helps firms and entrepreneurs innovate, adopt frontier technology and grow to become superstars? And what is the appropriate role for public policy in driving such changes? The ETIFE (Firms, entrepreneurship and innovation) unit at the World Bank, a team of microeconomists and development practitioners works on providing evidence-based, operationally-relevant solutions to these questions. The team’s expertise lies in core areas of innovation and technology adoption, firm growth and productivity, and small and micro entrepreneurs.

Strategy

The team conducts frontier research, develops new analytical products, and contributes to Bank lending, technical assistance, and advisory engagements in its core areas of expertise. The team works in partnership with other multilateral institutions as well as bilateral partners and donors. The offerings of the team include:

• Flagship reports: The team provides intellectual leadership on the core themes covered by ETIFE through flagship global/regional studies. Recent flagships led by ETIFE staff include High-Growth Firms (HGFs), The Innovation Paradox, Trouble in the Making? The Future of Manufacturing-Led Development, and South Asia’s Turn: Policies to Boost Competitiveness and Create the Next Export Powerhouse. Flagships in-the-works include global studies on technology adoption and the prospect of services-led development, and regional studies on East Asia (Aiming for the frontier: Innovation for Productivity and Inclusive Growth) and Europe (Europe 4.0: The Promise of Digital Transformation).
• Firm performance and ecosystem diagnostics: The team has conducted a range of diagnostics of private sector performance, including firm entry and exit, growth dynamics, and productivity and its determinants (e.g. Kenya, Western Balkans, Serbia, Czech Republic, Croatia, Macedonia, Mozambique). The team also leads on collecting original sources of data, including firm/management capabilities surveys in Mexico, Russia, Croatia and Mozambique and technology adoption surveys in Senegal, India, Malawi, Vietnam, Brazil, Bangladesh, and Korea. ETIFE is also piloting a new approach to entrepreneurship ecosystem diagnostics, including an assessment of enterprises’ internal capabilities, external factors, and the policy environment.
• Review of firm support policies and institutions: The team facilitates knowledge diffusion and adoption of good practices through policy dialogue and advisory work. ETIFE has carried out innovation and SME Public Expenditure Reviews (PERs) in more than 15 countries, including innovation policy reviews in Japan, Korea, Poland, Colombia and Chile and SME support reviews in Serbia, Ethiopia and Senegal. These PERs help client governments align their innovation/SME growth strategies and public spending on these programs with firm needs, strengthen the design and implementation of programs, and improve their efficiency and effectiveness. Their results have directly informed the design of lending operations and technical assistance programs.
• Impact evaluations: The team promotes rigorous evaluation of private sector development interventions through its Competitive Policy Evaluation Lab (ComPEL) initiative, which supports nearly 70 impact evaluations with direct operational implications. ComPEL codifies lessons from past projects and operations and initiates pilots to test new approaches with the aim of pushing the knowledge frontier, building capacity, and improving the quality of projects and country programs. Some recent examples include psychology-based personal initiative training to improve the performance of female-led firms in Togo, group consulting to improve management capabilities among auto parts firms in Colombia, and investment readiness programs in the Western Balkans. The success of personal initiative training for business owners in West Africa has led to more than 10 countries adopting the program and is globally among the top 3 interventions included in a new Innovations for Poverty Action (IPA) “path to scale” initiative.
• Implementation support to operations: The World Bank Group supports client countries by delivering components of lending operations and technical assistance projects in areas around firms, entrepreneurship and innovation. ETIFE staff have led/ are leading major components of client engagement in Bangladesh, China, Colombia, Croatia, Ethiopia, Ghana, India, Kenya, Kuwait, Malawi, Mexico, Peru, Pakistan, Poland, Saudi Arabia, Senegal, Serbia, Ukraine, and Western Balkans. Through the infoDev Multi Donor Trust Fund (MDTF) and Climate Technology Program (CTP), we partner with regional teams to pilot interventions to boost entrepreneurship and firm growth through business intermediaries (e.g. incubators and innovation hubs), access to finance, and adoption of technology. 

Last Updated: Oct 07, 2019