Failing but Innovative? How Bad Institutions Can Give Rise to Entrepreneurship

• In Event: Poster Session: Political Economy

Abstract

Developing countries lag behind in terms of economic development as well as innovation. The prevailing view is that innovation, the long-term driver of economic growth, depends on the right institutions in place, or the right policy impetus to ‘harness’ weak institutions to gain a comparative advantage. Contrary to these views, I demonstrate that there is significant innovation taking place in the developing world today, particularly internet innovation. I propose a new temporal and spatial measure of internet innovation that allows us to unravel the causes and consequences of digital entrepreneurship. Through controlled comparisons of developing countries that differ in terms of innovation, I show that ‘bad’ institutions can actually incentivize innovation on the internet rather than stifle it altogether. My arguments contribute to the political economy of development, innovation studies, as well as debates on comparative measurements.

Author

• Andy Buschmann, University of Michigan