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A Functional Analysis of Technological Innovation Systems in Developing Countries: An Evaluation of Iran's Photovoltaic Innovation System

Partners' Institution
Södertörn University
Esmailzadeh, M., Noori, S., Aliahmadi, A., Nouralizadeh, H., Bogeys, M., 2020. A Functional Analysis of Technological Innovation Systems in Developing Countries: An Evaluation of Iran’s Photovoltaic Innovation System. SUSTAINABILITY.
Thematic Area
Development studies
For developing countries to catch up, it is vital that they develop emerging technologies and the system that supports that development. The literature suggests developing a technological innovation system (TIS) framework to investigate the development of technologies in a country. Nonetheless, most of this research focuses on developed countries without taking into account developing countries. Therefore, in this paper, we have two main goals. First, reviewing the indicators introduced to the functional analysis of TISs and modifying these indicators based on developing countries' circumstances. Second, applying this framework to the specific case of Iran's renewable energy program by using these indicators for analyzing Iran's photovoltaic TIS to identify the problems. Accordingly, we review indicators used for a functional analysis by considering the needs of developing countries, and we propose a list of indicators that can be used for assessing functions in developing countries' TISs. The results show that, to evaluate some functions of TIS, we need to use new indicators in developing countries. Finally, we propose some policy recommendations to tackle these functional problems.
Relevance for Complex Systems Knowledge
The innovation system perspective provided a holistic view for analyzing innovation processes
and investigating systemic problems.The article starts with a presentation of different approaches such as National Innovation systems and Regional Innovations systems where the latter takes into account systemic differences within a country. The article then focus on Technological Innovation Systems, which  were originally defined as: “Dynamic network of actors who interact in one economic and industrial context and with a particular institutional framework and participate in the creation, dissemination, and exploitation of technology”. This concept is usually used to explain the emergence, growth, and diffusion of technology in a community.

Many attempts to evaluate innovation systems have focused on the structural element. These structural elements (such as institutions, infrastructure, actors, and networks) are interdependent. If one of these elements changes, it may also cause changes in other elements, and there would be a set of actions and reactions that either pushes the system forward or causes its failure. Not only is it necessary to focus on structural elements, but also, it must clearly identify what happens in these systems. Researchers have attempted to identify and analyze the activities or functions that are performed in the innovation system. Any obstacle that disrupts the proper functioning of the innovation system is considered a systemic problem.

Innovation policy refers to the actions that governments do to affect the innovation process
Innovation policy primarily concentrates on optimizing the innovation system in order to bolster its innovative capabilities and the fulfilment of its objectives. Therefore, it must not only improve the economic competitiveness of the innovation system but also induce strategic directionality and lead to positive social changes. Innovation policy instruments can be classified into three main types:  regulatory instruments, economic instruments, and soft instruments. Soft instruments provide recommendations, make normative appeals, or offer voluntary or contractual agreements. Policy instruments, in order to be fruitful, need a certain degree of ”customization” with the capacities of public administrators and dynamic needs of the system. Innovation policy mix is related to applying various policy instruments at multiple policy dominations to address the problems identified.

The goal-oriented nature of these tools prompts us to reflect on the specific function of the technology in question. Seven functions have been identified for TIS in developed countries, which need to be modified for developing countries:

Knowledge development, there are several sources of knowledge development (e.g., R&D, technological learning, and imitation). General indicators are the number of research and development projects, the number of patents, the number of scientific publications, and the amount of investment in R&D. Findings show that many of these indicators are at acceptable levels, but physcial infrastructures for R&D are at low levels. For developing countries these have to be supplemented by indicators for absorptive capacity (status of same knowledge indicators) and technical learning. Technical learning begins with learning from ready-to-use technologies. Consist of three stages, first no changes are made on the technology imported but engineers and researchers learn. Second, imported technology is imitated, and engineers are able to acquire the design knowledge. Third, with the help of the R&D centers and universities, the improvement in the imported technology will be obtained. The findings show that the third step has not been taken for PV in Iran. Knowledge created by universities is not properly distributed among the industrial sector and the country’s entrepreneurs and the dissemination of knowledge remains at the theoretical stage.
Resource mobilization - developing countries can use international
funding, which can strengthen the resource mobilization function. Regarding human resource utilization, developing countries can enhance this function by attracting their experts and skilled citizens from developed countries
Market formation - the market might be appropriate, but it is occupied by developed countries’ companies. To underpin the innovation system and increase the willingness of entrepreneurs to enter the market, protective actions should be considered for markets. In addition, it is necessary to think about the formation of new technologies market against the dominant technologies market.
Entrepreneurial activities - Findings show that entrepreneurial activities are the weakest function of the innovation system. The number of industrial firms in
this field is low, The level of innovation is negligible. Companies focus exclusively on production, and they do not focus on R&D.
Guidance of research - Despite the proper identification of goals and
visions for the future and the formulation of regulations by the government, relevant action plans to address these goals do not exist, are of poor design, or, are no addressing only parts of the system or too few system processes.
Legitimization - Findings show that the level of support and advertising for
investing in this technology in the media, social networks, and scientific and industrial meetings are not at a desirable level.
Point of Strength
The paper contributes an accessible shorthand description on what innovation systems are. Further by applying the TIS-approach to introduce renewable energy in Iran it highlightes how system weaknesses can be locally and situationally dependent. Through these highlites it also contributes to an enhancement of the TIS approach and an exemplification that can be useful in the context of learning about technological Innovation Systems