The policy rationale for supporting innovation and entrepreneurship in Bank Group projects has moved away from a narrow focus on market and government failures toward a much broader perspective that integrates other bottlenecks impeding innovation and entrepreneurship. When looking at the achievement of stated objectives and outcomes or benchmarks, evaluative evidence suggests that World Bank-supported innovation and entrepreneurship projects perform as well as other Bank Group projects. On a portfolio basis, IFC’s innovation-related projects performed just as well as projects without innovation components, generating financial and economic returns that were above IFC’s benchmarks. The limited evaluated projects supporting innovation and entrepreneurship performed just as well as other MIGA projects. Several financing and non-financing mechanisms have been used to implement these interventions. IEG found mixed evidence on the performance of some mechanisms. In general, interventions are more likely to perform well in areas where the Bank Group has operational experience. However, current corporate and sector strategies do not provide adequate guidance on how to develop interventions that can help client countries select, design, and implement policies and integrated programs to support innovation and entrepreneurship in a holistic manner. In fact, the World Bank Group does not have a comprehensive strategy and results framework for projects supporting innovation and entrepreneurship. This is partly because the agenda on innovation and entrepreneurship is still evolving. Bank Group interventions in this field have tended to be articulated around other thematic areas and not necessarily around innovation and entrepreneurship as a theme. Analysis of Bank Group interventions from country perspectives shows that they are often designed and implemented at the sector level, with strong alignment to institutional experience and specialization. These efforts do not address the systemic nature of innovation that is required for solving development challenges at the country level. In addition, limited mechanisms and weak incentives to share learning from design and implementation have restricted knowledge flows among sectors, regions, and Bank Group institutions. Yet there is increasing client demand for work on innovation and entrepreneurship. This needs to be better reflected and integrated across Bank Group operations and analytical work. Such efforts will help in improving the effectiveness of work on the ground and articulating a consistent set of messages to clients. IEG presents the following recommendations to strengthen the effectiveness of Bank Group support for innovation and entrepreneurship.
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World Bank Group Support for Innovation and Entrepreneurship