"Innovation in the developing world is constrained not on the supply side but on the demand side" I like this statement! what's your opinion?
Ref.: Rodrik, D., “Industrial Policy for the Twenty-First Century” (2004) p.4 #msalaheldin
Very often people seem to consider the adage "Build a better mousetrap and the world will beat a path to your door" to be always accurate and a recipe for sure success in the local, and by extension, global marketplace. However, they somehow do not seem to account accurately that the developing world has many limitations to use of the "better mousetrap" and that the infrastructure to support and keep that newer option a "better" one that what may already be there is just not locally in place or culturally may not be in place (or even possible to implement in the specific area in an immediate timeline - consumer support is incredibly valuable). If there is not a version of this new item in this potentially untapped market, why is that so? What is the opinion of the locals regarding whatever this item is intendent to disrupt?
I opened a cabinet shop once in Utah, in a city far out into the desert, and found that between the relationships between competitor owners/employees and the locals (I was not a blood relation to a born local, by the way, though my brother was our sales manager and was married to one, which did give us an opportunity to bid on the local Native American tribal contracts, which turned out to be our main client), the local market acceptance of relatively low quality alternatives to our far superior product construction and materials, low number of local supplier options, and a disastrous local economic crash (sudden oilfield drilling moratorium that halted the local energy extraction market which had survived and even was booming previously, despite the housing bubble collapse of the early Obama years) absolutely destroyed us and left me eventually homeless for a few years.
We could have weathered the economy, but they just did not want anything different than what their relatives were pushing on them, even if they were purchasing knock down particle board cabinetry of Chinese origin versus our far higher quality locally prepared (and sometimes even laminated in our own shop) plywood custom sized casework and in-house designed and finished hardwoods for the SAME PRICE OR LESS than the composites they were purchasing and that we were tearing out of sodden kitchens when we arrived to install our own work.
I learned the better mousetrap did not equate to success in a developing area, not even close. This area was trapped in the 1960s. I cannot even imagine how horrible it would have been in Sub-Saharan Africa or pretty much anyplace in Mexico or South America, or really any of the developing areas that still exist in Europe or Asia. Cultures have a LOT to do with whether businesses or products that are entering a market are successful, and blood relationships can be more powerful than cost my a LONG way...
A demand-constrained system is one where employment and output in the system are what they are because of the level of aggregate demand is what it is; if the level of demand increases then output and employment in the economy will increase, with very little increase in the price-level and for cheaper products innovation will be the base.
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