The literature on innovation processes in developing and emerging economies goes back to classical approaches of catch-up industrialization such as those by Thorstein Veblen and Alexander Gerschenkron. This early literature primarily discussed the role of foreign technology and their adaption for technological upgrading in developing countries. More recent approaches can be divided into export-oriented and domestic market-focused perspectives. In the former, entrepreneurial state agencies (modeled after the East Asian developmental states) and the integration into global value chains are key variables of interest. In the latter, the size and structure of domestic markets are seen as crucial variables. Both strands of the literature share a renewed interest in industrial policy (horizontal, vertical, and systemic). We also witness the rapid diffusion and adaption of the innovation systems framework to developing and emerging economies. However, the majority of theories on innovation processes in the Global South do not sufficiently consider the importance of frugal innovations. We exemplify the crucial role of this mode of innovation by drawing on anecdotal evidence from India. Finally, we identify methodological challenges for measuring frugal innovation and highlight avenues for further research.