Sunday, 24 May 2015

Product innovation rates across the DRC

Enterprise economics praises cities, particularly capital cities.  They are talked about as hubs of commerce, a place for exchange of ideas, and centres of innovation.  When enterprise economics isn't praising cities, it is often eulogising on places that share features with cities, such as industrial zones and business clusters.

The latest DRC data from the World Bank allows us to see where innovative companies are based in the country.  Here are the rates of introduction of new or improved products, split by region:

Nationwide, over four in ten companies have innovated in new products in the last three years.  Surprisingly, the rate is lowest in the West around the capital Kinshasa.  The region has many advantages that should make it innovative: it has the capital city, it is by the coast for easy trading, it has a measure of security, and it is easiest for international expatriates to reach.  But the most innovative region is the South, which does have the large city of Lubumbashi.

Innovation in new or improved products could be an introduction to the company (but rivals already make the product), or it could be stricter innovation of products that are new to the whole market.  When we look at this stricter, new-to-the-market innovation, there are even more surprising results:

The West has even lower innovation rates with only a quarter of companies innovating, while in the South and East over a third of companies have innovated in the last three years.  The East's innovation occurs despite its relative isolation from other knowledge centres and the predations of armed groups.

Assuming that the self-reported data is correct, I would guess at explanations like "the region is catching up", "necessity is the mother of invention", or "there is competition to take part in the extractive industries".  But these are only plausible guesses.

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