Innovation systems, saving, trust, and economic development in Africa

The five essays in the dissertation explore the interaction between economic development in Africa and three economic concepts from different fields: decentralized agricultural innovation systems, trust and saving practices. A relatively new view to boost agricultural growth is the implementation of the innovation system approach. The Sub Saharan African Challenge Program adopted this approach through the development of local decentralized Innovation Platforms (IPs) in eight African countries. The first and the second essay respectively evaluate the impact of those platforms, on poverty and the adoption of agricultural technologies. The studies reach to mixed results concerning average impact on poverty and technology adoption. Some platforms promote the adoption of some innovations and reduce poverty level, and others do not (yet). The third essay complements these studies and investigates whether this difference in IP performance is because they may not have equally implemented the principles of the approach. The essay shows that IPs which performed better in human capacity development at the field, ceteris paribus, are more successful. Theory suggests that trust fosters economic development via reduced transaction costs and increased specialization. A vicious cycle may materialize if increased specialization, via increased market integration, also fosters trust. To shed light on the latter, the fourth essay studies whether increased market integration fosters trust by using a comprehensive survey of households living in West Africa in the early stages of market integration. The study identifies a negative and causal relationship between market integration and trust, which is contradictory to the theory. Having limited access to finance, entrepreneurs in developing countries have to utilize business profits or save in order to invest in their businesses. At the same time they keep their savings in multiple practices (e.g bank account, moneylender, etc.), which potentially may have different efficiency levels, and therefore may have varying effects on business investments. The fifth essay studies how different saving practices affect the likelihood of business profit reinvestment. The study shows that the practice of saving in a deposit account of a formal financial institution is more likely to facilitate reinvestment compared to the practice of keeping savings within the household.