Knowledge for Development

Promoting Agricultural Innovation Systems Approach: The Way Forward

Author: Riikka Rajalahti, Sr. Agricultural Specialist, Innovation Systems, Agriculture and Rural Development Department, the World Bank

Date: 30/06/2009


Investments in knowledge systems have featured consistently in most strategies to promote sustainable agricultural development at the national level. The World Bank alone has invested more than 2.5 billion USD into agricultural R&D and advisory services over the past 20 years. Many of these investments have resulted in very high returns and pro-poor growth. We have also been fairly successful in strengthening research systems and increasing available knowledge but they have not necessarily resulted in greater use of knowledge and innovation (Rajalahti et al. 2005). Farmer productivity is still often constrained by lack of appropriate technology or access to technology, inputs, services and credit, and by farmers’ inability to bear risks. In addition, farmers’ information and skills gap constrains the adoption of available technologies and management practices or reduces their technical efficiency when adopted (WDR 2008). To address these challenges, we have gradually shifted from strengthening research systems and knowledge transfer towards building innovation capacity, enhancing use of knowledge and creating social and economic change.


Parallel to these efforts at reforming and improving knowledge systems, the context and knowledge intensiveness of agriculture have changed rapidly, i.e., drivers of innovation are rapidly changing. Agricultural development is increasingly driven by globalization, urbanization and markets rather than by production; the role of the private sector in knowledge processes (in generation, use and dissemination) has significantly increased; ICT has radically changed the pace and accessibility of knowledge and information; the knowledge structure of agriculture is changing – knowledge is increasingly relying on multiple knowledge providers, not that of public agricultural R&D and R&D organizations only (adapted from World Bank 2006).

These factors pose both challenges and opportunities for the knowledge systems. Important questions include: how do we maintain the sustainability of the agricultural production base; how do we establish efficient value chains and retain competitiveness; how do we take advantage of the new platform technologies (ICT and biotechnology); and how do we cope with climate change?

In a changing context, if farmers, companies and countries are to cope, compete, and survive, they need to innovate continuously. But what is innovation? Innovation refers to the process of creating and putting into use combinations of knowledge from many different sources (adapted from Mytelka 2000). Thus, innovation may be brand new, but usually it involves new combinations of existing knowledge, i.e., small, gradual changes in technology, processing, organizational management, etc and/or creative imitation. But how do we invest in a manner that is conducive to innovation? While investments in R&D, extension and education remain important, these have tended not to be sufficient to meet today’s challenges and rapidly changing context. A more flexible approach that better fits these conditions and enables knowledge generation, use and innovation in different contexts is needed. Such a flexible approach may be provided by the innovation systems approach that emerged already in the 1970s and 1980s and has its origin in the evolutionary economics (Freeman 1987; Lundvall 1992).

Studies on innovation indicate that ability to innovate is often related to collective action and knowledge exchange among diverse actors, incentives and resources available for collaboration, and having in place conditions that enable adoption and innovation e.g., by farmers or entrepreneurs (World Bank 2006). A number of examples featured in box 1 provide information on how innovation has occurred in agriculture.

Box 1. Agricultural Innovation System Examples

Some examples from recent work with the World Bank and others point to the diversity of configurations of the networks that underpin innovation systems. Innovation systems is not a blueprint for a new way of organizing innovation – rather it is a framework approach that allows one to adjust the activities based on the context and development phase. Below is a list of a few different cases - in some cases, sector growth was induced by marked demand factors and thereby the role of the private sector as a driver was significant. In some others the sector growth was stimulated by the public sector interventions, such as policy, R&D, and other incentives.

Cassava processing innovation system, Ghana

  • Research led development and promotion of new cassava products with private sector coalition
    Cut flower innovation system, Colombia
  • Continuous innovation in response to changing markets, licensing foreign technology, coordinated by an industry association

Medicinal plants innovation system, India

  • Mobilising traditional and scientific knowledge for rural communities, coordinated by a foundation
    Small-scale irrigation innovation system, Bangladesh
  • Civil society organisation promoted low-cost pump to create markets. Small-scale manufacturers then innovated with pump designs in response to local needs

Golden rice innovation system, Global

  • Complex partnership of multinational crops, internal agricultural research organisations and universities and development foundations. Complex but creative institutional arrangements over ownership and used to target the poor

Common in all different cases: while growth takes place, the sectors gradually face challenges and their success at addressing those challenges has often been related to their ability to improve interaction and weak linkages between diverse actors that are needed to respond to challenges such as meeting stringent quality standards, how to remain competitive, respond to changing consumer taste, addressing technological challenges, etc. Thus, all the cases illustrate the importance for addressing linkages between actors, strengthening collective action, facilitation and coordination by intermediaries, building skills base, and creating an enabling environment.

Source: Rajalahti, R.; Hall, A.; World Bank 2006; Hall et al. 2007.

The “agricultural innovation systems” (AIS) concept has been developed to better understand how a country’s agricultural sector can make better use of new knowledge and design alternative interventions that go beyond research investments. A simplified conceptual framework of AIS is presented in Figure 1. The framework illustrates the main actors (e.g., typical agriculture knowledge and technology providers and users as well as bridging/intermediary institutions and actors that facilitate interaction among them), their potential interactions with each other, all influenced by the agricultural policy context and the overall informal institutions, attitudes and practices that either support or hinder innovative processes. Thus, promoting innovations in agriculture requires coordinated support to agricultural research, extension and education, fostering innovation partnerships and linkages along and beyond agricultural value chains, and creating an enabling environment for agricultural development.

Figure 1. A conceptual diagram of an agricultural innovation system










Source: Spielman and Birner (2008); adapted from Arnold and Bell (2001).

Frameworks. How does the innovation systems approach differ from the past efforts at building agricultural “research capacity” and approaches for investing in innovation capacity? Table 1 summarizes the three main frameworks and their main characteristics and differences that have guided our understanding and investments in knowledge systems and innovation capacity. In the 1980s, the linear model was used to argue for the need to strengthen national agricultural research systems (NARS) and investments focused on strengthening research supply by providing infrastructure, capacity, management, and policy support at the national level. Since the 1990s, the agricultural knowledge and information system (AKIS) concept brought more attention to demand-side factors. The most recent framework on AIS, has guided the approach to planning knowledge production and use. It takes notice of the importance of building strong organizations and effective research-extension-farmer linkages, and not only builds on the NARS and AKIS approaches, but goes beyond this to take notice of the additional features needed for actors to collaborate and respond to needs (such as professional skills, incentives for partnerships, better knowledge flow, etc.) and the wider enabling factors that must be put into place for actors to innovate.

Table 1. The main characteristics of the three main frameworks used in promoting and investing knowledge in agriculture sector.


Defining feature







Actors Research organizations Farmer, research, extension and education Wide spectrum of actors
Outcome Technology invention and technology transfer Technology adoption and innovation Different types of innovation
Organizing principle Using science to create new technologies Accessing agricultural knowledge New uses of knowledge for social and economic change
Mechanism for innovation Technology transfers Knowledge and information exchanges Interaction and innovation among stakeholders
Role of policy Resource allocation, priority setting Linking research, extension and education Enabling innovation
Nature of capacity strengthening Strengthening infrastructure and human resources Strengthening communication between actors in rural areas Strengthening interactions between all actors; creating an enabling environment

NARS = National Agricultural Research System; AKIS = Agricultural Knowledge Information Systems; AIS = Agricultural Innovation System. Source: World Bank 2006.

What is the value added of AIS investments into innovation capacity compared to past (NARS and AKIS) investments in agricultural R&D capacity? While AIS builds on the previous approaches, the AIS approach:
• Emphasizes the development outcomes and growth arising from technology and knowledge generation and adoption rather than the strengthening of research systems and their outputs.
• Draws attention to the totality of actors and factors needed for innovation and growth. While science is considered to be an important source of innovation, the AIS approach is a less science driven process.
• Emphasizes innovations deriving from an interactive, dynamic process that increasingly relies on collective action and multiple knowledge sources.
• Emphasizes the importance of interactions within a sector - is more inclusive and leverages the resources of different actors, e.g., private sector role is more prominent, civil society and farmer’s associations play an important role in facilitating collective action.
• Consolidates the role of the private sector and agribusiness – value chains are a particularly important organizational form in the context of AIS.
• Brings to the fore the need to build the innovative capacity of the diverse actors, incl. agricultural education and training system, in a coordinated manner and the role of an enabling environment.
• Is context specific and allows identification of opportunities and binding constraints and thereby a more tailor made, incremental support and investments that respond to the development phase of the country/territory/sector.

Investing in AIS in the World Bank
Over the years, the World Bank has invested in some of the AIS components, namely AKIS covering agricultural research, extension and education & training. Figure 2 illustrates the AKIS commitments from 1981 to 2008. While the Fiscal Year 2008 commitment was about $126 million, the annual commitments vary between $100 million and $700 million (Rygnestad et al. 2009). The leveling of the AKIS investments in the early 2000 is associated with the overall reduction in agriculture sector lending. A trend of significant concern (not shown in the figure) is the very limited commitments into agricultural tertiary education since early 1990’s. Based on other reviews, this trend is similar among governments and donors alike (World Bank 2008).










Figure 2. Trends in estimated World Bank commitments into AKIS from 1981 to 2008.

The World Bank AIS focused portfolio review (FY1990-2006) revealed that investments have already shifted towards a more pluralistic approach with greater inclusiveness and actors, diverse funding modalities, and support to an enabling environment conducive to innovation. However, a number of challenges and needs for improvement have been identified, namely innovation capacity and enabling environment. Innovation capacity may be further enhanced by (i) strengthening of sector coordination and partnership formation through effective inclusion of coordinating bodies as well as financial organizations (such as banks, credit unions, futures trading, micro credit providers); (ii) addressing regional differences in organizational culture and learning - particularly targeting attitudes among actors that restrict collaboration; (iii) enhancing further inclusiveness through establishing sustainable research and service provision that is pluralistic and also demand-driven; (iv) providing incentives for partnerships and collaboration more frequently through financing modalities such as competitive grants, public-private partnerships, matching grants, cost-sharing and co-financing and through capacity building on contractual arrangements; (v) strengthening of agricultural training and education through increased investments overall, and particularly on aspects such as innovative capabilities of organizations and individuals and organizational cultures; (vi) supporting investments for the enabling environment to include more focus on business development support, knowledge and market information systems, and necessary policy and legal reforms (Rygnestad et al. 2007).

Investing in AIS – moving forward. Investing in AIS requires an integrated, context-specific approach that addresses innovation and institutional capacity of the multiple interactive partners, not only that of the NARS, in parallel with the enabling environment and in tune with the national agriculture-rural development priorities and agenda (Rajalahti et al. 2008). The key issues to address include the following:

  • Support to research must focus on developing the interface with the rest of the sector and the rest of the society;
  • Extension systems must be flexible, user driven and focused on overcoming local problems - a ‘new’ role as a knowledge broker;
  • Agricultural education investments need to increase and need to combine technical, socio-economic and managerial skills to build a cadre of professionals capable of working in an AIS;
  • Organizing and empowering (rural) people and strengthening sector coordination;
  • Engaging private organizations as real partners of government and investments; and
  • Institutional experimentation for innovation – thus, step-by-step approaches and pilots are an integral part of building responsive and capable institutions (adapted from Janssen, W.).

Before any investment, one however has to give consideration to a few essential issues: (i) Each country or sector is at a different stage of development, as illustrated in box 2, and typically requires interventions that fit the phase; (ii) optimal resources – human or financial - are rarely available; (iii) a step-by-step, incremental approach is often advisable; and (iv) the scale of operations may vary - sub-sector vs. local/zonal vs. sub-regional vs. national. Given this variation, one has to prioritize, sequence and tailor the investments to fit the needs, challenges and resources available.

Box 2. The different development phases and timing of innovation stimulating investments

The figure below depicts two trajectories, developed based on eight agriculture case studies (World Bank 2006). The orchestrated innovation system is one stimulated by public sector interventions whereas the opportunity-driven innovation system is stimulated by private sector action. Examples of innovation promoting interventions are described next to the diverse phases of development.

In the pre-planned phase of the sector new opportunities have not yet been identified, and no research or other policy intervention has been made. Many developing countries are at this stage of development. In the foundation phase, priority sectors and commodities have been identified – e.g., using foresight activities - and the government supports them through research and policy interventions. However, these efforts often have a limited effect on growth. In the expansion phase, the government intervenes with projects and special programs to link actors in the innovation system.

The nascent phase resembles the pre-planned phase of orchestrated systems but the private sector is more proactive. Companies or individual entrepreneurs have identified new market opportunities, but a recognizable sector has yet to emerge. Many of the market-driven sectors have begun in this way. In the emergence phase, the sector takes off. Rapid growth is observed, driven by the activity of the private sector or NGOs. The sector starts to be recognized by the government. In the stagnation phase, the sector faces increasing and incremental evolutionary pressures to innovate because of competition, particularly from other countries, and because of changing consumer demands and trade rules. This situation is the most common across the case studies.
The ultimate phase is a dynamic system of innovation, which can be established with the right type of support. The sector is characterized by a high degree of public and private interaction and collaboration in planning and implementation. It is agile, responding quickly to emerging challenges and opportunities and delivering economic growth in socially inclusive and environmentally sustainable ways. One may have to invest in activities that maintain this dynamism.

Source: Rajalahti, R. adapting from World Bank 2006.

The operational relevance of the AIS approach is sometimes questioned compared to previous investment approaches, i.e., NARS and AKIS. While the AIS approach builds on the NARS and AKIS approaches, it has distinct new areas of investment. The distinct ‘new’ areas of investment include: (i) emphasis on joint action, i.e., organization of stakeholders at diverse levels; (ii) enhancing interaction, learning and knowledge flow within organizations and across organizations and sectors; (iii) focus on outcomes, i.e., putting ideas to use; (iv) inclusion of private sector as a significant player and innovator, requiring improved innovation capacity and incentives for all actors; (v) parallel or coordinated investments into enabling factors. Table 2 below summarizes the five main areas in which the AIS distinguishes and clearly provides new ways of promoting innovation.

Table 2. The Main Additional Areas to Invest in Associated with the Agricultural Innovation Systems (AIS) Approach Compared to Strengthening National Research Systems (NARS) or Building the Agriculture Knowledge Information Systems (AKIS).

Focus investment/ Activity Examples
Joint action among stakeholders

National innovation committees/council

Industry-agribusiness-(sub-)sector level associations, coordination committees or boards

Producer Organizations

Enhancing interaction, learning and knowledge flow

Information venues such as annual consultation/knowledge

sharing workshops, stakeholder platforms (consultative/planning/integrative)

Virtual platforms, web interface

Sector or industry networks

Knowledge brokers with appropriate skills and tools

Focus on outcomes

Technology transfer units, Technology Fairs

Pilots on new technologies and practices in partnership

Training for professional skills, market understanding, entrepreneurship, IPR

Technology incubators

Technology foundations for transfer and commercialization

Private sector’s role as a significant player and innovator

Innovation funds, incubators, match-making services, etc

Lower transaction costs – organization of actors

Training, internships programs, university-industry curricula

Units for special services and communication

Coordinated investments into enabling factors

Infrastructure, Market development, Financial services,

Regulatory issues - IPR, standards, etc

Source: Rajalahti, R.

However, assessing, designing and investing in AIS in lending operations require a wider set of tools and means (than presented in the summary table 2). These can be divided roughly to five main groups: (i) assessment of AIS; (ii) scoping and coordination activities, (iii) building innovation capacity, (iv) providing incentives for interaction, linkages and innovative partnerships, and (v) complimentary enabling investments. As the scope of the needs and projects may vary, the selection of interventions may be more locally and/or nationally focused (Rajalahti et al. 2007).

The activities/investments may include the following (expressed in very broad terms):

  1. It is essential to assess the status of AIS, incl. the critical factors, actors and conditions for innovation. Some of the appropriate tools include the AIS framework, Actor Linkage Matrix, NetMap Tool and Benchmarking tools.
  2. Scoping is needed to develop a joint perspective on the future goals and challenges, i.e., identification of needs, opportunities and priority interventions and their limits (e.g. focus on sub-sector/territory/national). It is useful to engage multiple stakeholders, including actors from other sectors in these activities, e.g., via stakeholder platforms/committees or alliances, foresight groups, scenario planning and analysis exercises.
  3. Coordination is essential to secure coherence, connectivity and interaction among the activities and actors. Some of the appropriate tools include sector/innovation committees/councils, associations, national innovation committee, etc.
  4. Organization of stakeholders is needed to enhance joint action and knowledge flow, e.g., through building/strengthening Producer Organizations and Community Driven Development groups, sector/industry associations and networks, cross-sectoral boards, etc.
  5. An essential part of promoting innovation is to develop a framework for new ideas and commercialization. Two distinguished aspects to achieve that include
    (i) to build innovation capacity for generation of new ideas/ways, innovation and collaboration (skills, practices, organizations). Important aspects of this include e.g., supporting research interface (skills, units, connectivity), reforming and training extension to a new role, aligning Agricultural Education and Training (AET) along AIS needs, university-industry joint programs, etc., building professional skills among all actors, incl. private sector, civil society , associations and POs;
    (ii) Enabling the use of this new capacity by providing incentives for interaction, linkages, innovative partnerships and new businesses development. Examples include establishment of units for business promotion, innovation funds, e.g., competitive (research) funds/matching grants, provision of business development services or setting up incubators, promotion of sub-sector/commodity clusters, science/technology parks, tax breaks for agro-industries and finally provision of support services, e.g., match-making, contractual procedures, IPR facilitation, ICT, start-up funds, etc.
  6. Complimentary enabling investments conducive for innovation and business development. In theory a number of different aspects could be covered, however, resource availability, sequencing and prioritization are needed to address aspects such as infrastructure, market development, policy (e.g., trade & investment, resource allocation), regulatory frameworks (e.g., standards, biosafety, IPR, etc) and financial services.

The World Bank is committed to taking the AIS approach forward by further integrating the approach in its lending operations, by developing operationally targeted analytical work that supports quality assurance and scaling up, and by collaborating and interacting with other actors on this front.


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