For most of the last two centuries innovations have flowed from rich countries to poor countries, but in the coming decades we are likely to see innovations also flow in the opposite direction, from poor to rich countries.
If “reverse innovation” sounds counter-intuitive, it is. One can readily understand why poor countries will embrace innovations from rich countries. It is no surprise, for instance, that demand is booming in emerging economies for smartphones, washing machines, cars, and the like.
But why would rich countries want innovations from poor countries? To focus on one important reason: there are many more poor people in rich countries than one might expect, and they’re looking for every way to stretch their purchasing power.