For companies and countries, innovation is an essential part of sustainable competitive advantage, increased productivity and economic progress.
Innovation acts as a key determinant of long-term growth by improving ways of combining capital and labor.
About half of the disparity in income levels and growth rates between countries due to differences in total factor productivity.
Studies have concluded that investment in research and development explains up to 75% of the differences in total factor productivity growth rates.
A decisive factor for an economy based on knowledge is the exponential growth of information generated by the expansion of information technology and communications.
The Bank’s operational and knowledge-related tasks in this area will be based on:
- Building institutional capacity in the national innovations systems following internationally recognized best practices.
- Seeking to tackle clearly identified market or coordination failures.
- Incorporating a strong operations’ evaluation process; and increasing data availability for knowledge generation.