There is an emerging body of literature analyzing how smallholder farmers in developing countries can benefit from modern supply chains. However, most of the available studies concentrate on export markets and fail to capture spillover effects that modern supply chains may have onlocal markets. Here, we analyze the case of sweet pepper in Thailand, which was initially introduced as a product innovation in modern supplychains, but which is now widely traded also in more traditional markets.

Globalization, urbanization and new market demands - together with ever-increasing quality and safety requirements - are putting significantly greater pressures on agrifood stakeholders in the world. The ability to respond to new challenges and opportunities is important not just for producers but also for industries in developing countries. This paper aims to present what "innovation response capacity" entails, especially for natural resourcebased industries in a developing country context.

There are divergent views on what capacity development might mean in relation to agricultural biotechnology. The core of this debate is whether this should involve the development of human capital and research infrastructure, or whether it should encompass a wider range of activities which also include developing the capacity to use knowledge productively. This paper uses the innovation systems concept to shed light on this discussion, arguing that it is innovation capacity rather than science and technology capacity that has to be developed.