This paper discusses innovation in low and middle-income countries, focusing on the role it has played in local and national responses to the COVID-19 pandemic, and the lessons from this effort for how innovation might be harnessed to address wider development and humanitarian challenges by mobilising resources, improving processes, catalysing collaboration and encouraging creative and contextually grounded approaches. The paper also examines how international development and humanitarian organisations can improve their support for local and national innovation efforts.

Addressing 21st century development challenges requires investments in innovation, including the use of new approaches and technologies. Currently, many development organisations prioritise investments in isolated innovation pilots that leverage a specific approach or technology rather than pursuing a strategic approach to expand the organisation's toolbox with innovations that have proven their comparative advantage over what is currently used.

For most development organisations and funders, innovation remains a sprawling collection of activities, often energetic, but largely uncoordinated. To a dregree, this has also been the case for Iceland's development co-operation. Iceland, a comparatively small but energetic player in the international development co-operation system, provided the equivalent of 0.28% (roughly 67 million Euro) of it 2021 gross national income towards Official Development Assistance.