This is a simple analytical tool that has been developed as part of Sida’s action programme for capacity development. It is intended to provide guidance in project preparation and project assessment. It shall assist Sida staff and other actors to define needs for capacity development. It will thus help to identify factors that are important for sustainable development.

The present report is based on the authors' visits to Bolivia, Honduras and Nicaragua, during June-August 2004 in order to develop an initial understanding of innovation processes and identifying stakeholders working with national innovation processes. It also review the experiences of the invited Latin American participants in the 7th Global Conference of Competitiveness Institute (entitled "Building Innovative Clusters for Competitive Advantage") in September 2004 and finally presents suggestion for further activities.