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This paper assesses the potential social pay off of alternative measures that might be taken to promote innovation in LDCs. It is mainly concerned with the general issues of encouraging technical innovation in the nonagricultural sectors. However, it also is focused on the more particular but important question of how to generate innovations that lead to new techniques of production which are better suited than existing ones to the social objectives of employment and greater equality in the distribution of income. Part 1 discusses the process of innovation and describes the skills associated with it. Part 2 sets forth some of the special problems that developing economies encounter in building up innovative skills. Part 3 draws together some of the main implications for policy and explains how priorities for the development of local innovative activities might be determined. Part 4 analyzes the patterns of innovative activity that might be needed in developing economies. Part 5 summarizes the main conclusions and suggests some of the implications of adopting an approach that stems from these conclusions.
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