Industrial and innovation policies in times of crisis: a widening technological divide?

Industrial and innovation policies are gaining additional traction, becoming crucial aspects of many governments’ toolkits to support innovation, build resilience, and accelerate the green energy transition. There are, however, enormous disparities across economies in their capacity to implement industrial policies, particularly those to support science, technology and innovation. Most developed countries, and some that are developing, are implementing bold, ambitious, and long-term innovation policies towards strengthening technological capabilities, bolstering R&D investments, and supporting advanced manufacturing and green energies. Amid lack of fiscal space and vulnerable fiscal frameworks, institutional deficiencies, and weak innovation ecosystems, developing countries –particularly in Africa and Latin America and the Caribbean– face enormous challenges to implement strategic innovation policies. Under the current economic, financing, and institutional conditions and policy trends, the technological divide across economies could widen even further in the coming years, limiting the progress of developing countries towards the SDGs and leaving many of them further behind.