Innovation and knowledge spillover: insights from the Ethiopian manufacturing industry

Abstract

Knowledge plays a key role in technological advancement and structural transition. However, many manufacturing firms, especially in developing countries, struggle to source and reap the benefits of knowledge. Using a dual study approach of manufacturing firms in Ethiopia, this paper suggests that a strong national innovation system that facilitates knowledge spillover is important. The paper also suggests that joint venture, subcontracting, and cluster-based industrial development are alternatives to promote knowledge spillover, which in turn, strengthens knowledge transfer activities, especially technology-related knowhow, in developing countries. This, in turn, empowers manufacturing firms, especially in developing countries, to catch up and leap front to industry 4.0.