The Tata Nano, a city car both man­u­fac­tured and sold in India, retails for $2,500, making it one of the world’s most afford­able four-​​wheeled pas­senger vehicles.

The inex­pen­sive car, said Ravi Rama­murti, a Dis­tin­guished Pro­fessor of Inter­na­tional Busi­ness and Strategy at North­eastern Uni­ver­sity, is but one example of a bur­geoning phe­nom­enon called reverse innovation.

The term, coined in 2009, refers to the process by which com­pa­nies in emerging mar­kets pro­duce inex­pen­sive goods and ser­vices to meet the needs of the poor and then repackage them as cost-​​effective inno­va­tions for Western buyers.

We are at the cusp of some­thing inter­esting,” Rama­murti explained. “The key con­tri­bu­tion of poor coun­tries will be to make existing prod­ucts and ser­vices incred­ibly inex­pen­sive and easy to use.”

Rama­murti, the director of Northeastern’s Center for Emerging Mar­kets, pub­lished a paper in 2011 in the Global Strategy Journal in which he out­lined the phenomenon’s poten­tial to reshape the globe’s inno­va­tion landscape.

The paper, coau­thored by Vijay Govin­darajan of the Tuck School of Busi­ness at Dart­mouth Col­lege, was selected by Germany’s Euro­pean Busi­ness School as one of three final­ists for the prize for best article on inno­va­tion man­age­ment pub­lished last year.

Rama­murti pre­sented the paper in June to a panel of judges com­prising prac­ti­tioners and aca­d­e­mics, and took the top prize, besting arti­cles penned by pro­fes­sors at uni­ver­si­ties including MIT and Stanford.

We are using the term ‘inno­va­tion’ in a broad sense,” Rama­murti explained. “It is not tech­no­log­ical inno­va­tion, like cre­ating a new drug, but rather com­bining existing knowl­edge and tech­nology in novel ways to solve the pressing prob­lems of con­sumers in poor countries.”

The cur­rent eco­nomic cli­mate is con­ducive for reverse inno­va­tion to flourish, he said, noting that devel­oping coun­tries such as India, China, and Brazil now account for two-​​thirds of world gross domestic product growth.

Local firms in poor coun­tries may, para­dox­i­cally, have an inno­va­tion edge over multi­na­tionals from devel­oped nations, Rama­murti added, pointing to the example of Kenya’s Safaricom, a pio­neer in the wire­less banking industry.

Some­times it’s good to be a late­comer, because you can simply leapfrog to using the latest tech­nolo­gies,” he explained. “It’s hard to go wire­less if you have mas­sive invest­ments in legacy technologies.”

By 2013, many of these inno­va­tions will “trickle-​​up” from poor to rich coun­tries, where flag­ging economies, Rama­murti said, have cre­ated a need for inex­pen­sive, easy-​​to-​​use goods.

A portable, low-​​cost ultra­sound machine, for example, designed by China’s Min­dray Med­ical Inter­na­tional Lim­ited, may soon be spotted in doctor’s offices across the United States.

You would be able to put them in ambu­lances and doctor’s offices at a rate that wouldn’t be pos­sible if the machine cost $150,000,” Rama­murti said. “It is an example of how a new func­tion­ality com­bined with a lower price can open up new demand in rich countries.”