This book explores the coevolution of firms, sectors, regions, and national economies in the Global South and explains their economic performance as a dynamic outcome of interactions between the multiple levels of innovation systems. This book counters prevailing views on economic development and offers a unique contribution to the literature on economic catch-up. Whereas the traditional linear view of development has taken a “more is better” approach, this book advocates that latecomers should pursue detours or leapfrogging, which conforms with a “less is better” approach. Instead of the conventional prioritization of manufacturing, this book proposes prioritizing domestic ownership and knowledge in specific sectors and regions and asserts that no country has successfully developed a high-income economy without generating a certain number of globally recognized big businesses. Instead of placing priority on free markets as the Washington Consensus does, this book argues that economic catch-up is only possible with active and planned government interventions, which are needed to overcome latecomers’ disadvantages regarding barriers to entry at the middle-income stage.

The objective of this chapter is to present two approaches useful in the study of the formation and dynamics of particular systems in the bioeconomy. Innovation systems have a horizontal perspective to production processes, while value-chains analysis adopts a vertical perspective. The innovation system approach conceptualises the circulation of knowledge within systems and the way in which the institutional environment favours the development of innovation. The value chain approach is interested in the co-creation of value, its circulation in the international division of labour, and the relations between regions in the world.

This chapter shows that implementing similar policies supporting the transfer of knowledge from public research to industry in countries with different innovation systems requires different sets of complementary policies. Drawing on six case studies, which range from high- (UK, Germany, Republic of Korea) to middle-income countries (China, Brazil, South Africa), this chapter describes the process of policy convergence and why countries might differ substantially in their approach. In high-income countries with mature national innovation systems, the adoption of Bayh-Dole-inspired legislation meant that research expected to produce patents was incentivized and preferred over other types of commercialization. The policy challenge here is to ensure all channels of knowledge transfer are appropriately nurtured. In middle-income economies, where knowledge ecosystems were less mature, the Bayh-Dole legislation resulted in a process of institutional reform, such as incentives to researchers, changing the legal structure of the university incomes and the use of public research institutes. Thus, for knowledge transfer policies to be successful, it is crucial to identify the appropriate complementary measures.