National Innovation Systems Samantha Pinto Jiaxiao Zhang

Agenda Summary of article 1 Reflection 1: examining China and India’s advantages and disadvantages of their National Innovation Systems and economic growth Summary of article 2 Reflection 2: suggesting how China and India can improve their National Innovation Systems

Article 1 Continental, national and sub-national innovation systems - complementarity and economic growth Chris Freeman

What is a national innovation system? Narrow Narrow - Institutions that insist on promoting the acquisition and dissemination of knowledge while being the main sources of innovation depict a narrow national system of innovation. Broad Broad - the scale, direction and relative success of their innovative activities are determined with the help of the system’s political, cultural influences and economic policies.

Freeman's article - Role of NIS Explains the role of a country's innovation system on its economic growth Significant divergence in economic growth rate between developed and developing countries over time Innovation plays a key role Governance system aligned with industry

BRITAIN Leading economy in the 18th century Science was worshipped Congruence of science, technology and entrepreneurship

UNITED STATES Influenced by the British economy Technology bootlegged from Europe Absence of a feudal system Abolition of slavery

LATE COMER COUNTRIES Catch up economies- Japan, Korea, Taiwan Invested heavily in in house R&D and education Imitation ( less costly) Downfall: Large scale production without proper knowledge of technology buildup Solution: Active learning ex. Eastern Asia

Reflection 1 Common advantages of China and India Huge market demands and cheap labour force o attract investments from developed countries o access to newly advanced technology, technical skills and knowledge. Acquisition instead of innovation on technology and knowledge o lower the risks and save the time, effort and cost for research and development. o move more rapidly to large-scale production and achieve economies of scale.

Reflection 1 Common disadvantages of China and India Education systems o relatively unsuccessful compared to developed countries. o limit the abilities to innovate and less support to NIS Roles in the world’s economic competition o limited as simple manufacturers and service providers. o small economic value and gross margins

Reflection 1 Compare China and India - China More developed innovation infrastructure o average communication resources owned per person o information and knowledge can be transmitted more efficiently and on a larger scale Higher total input and output for innovative activities.

Reflection 1 Compare China and India - India Better higher education o overall quality of higher education o cultivating R&D professionals and intensifying its scientific research High-tech industries account for higher proportions in India’s total GDP o 4.75% in India’s total GDP compared to only 4% for China. o more knowledge based and innovative economy o better potential in becoming a knowledge intensive economy.

Article 2 Determinants of National Innovation Systems: Policy implications for developing countries Frank L Bartels, Hinrich Voss, Suman Lederer & Christopher Batchtrog

Purpose of the study Suggest certain determinants that exist in high performing National Innovation Systems of developed economies Use these to provide valuable insight to the policy and management of National Innovation Systems in developing countries with less than efficient economies.

Study: Variables of NIS development 1.‘structural dynamics of knowledge management’ 2.‘structural dynamics of decision making’ 3.‘structural dynamics of government– business relations’ 4.‘structural dynamics of the market’

Study: Variables of NIS development Statistically significant: 1.‘structural dynamics of knowledge management’ 2.‘structural dynamics of decision making’ 3.‘structural dynamics of government– business relations’ 4.‘structural dynamics of the market’

Findings of the study Key determinants of NIS: knowledge management education system juridical autonomy of institutions clear regulations low red tape sophisticated markets and investments

Reflection 2 Consistent findings with the 1st article Importance of government regulation and support to improve a country’s NIS o creating and promoting an innovative culture o giving clear instructions to the markets o making more tangible and intangible investments. An effective education system leads to competitive advantages when improving its National Innovation System. o Provides high quality education Importance of scientific outputs o intellectual property and patents o contribute to economic growth

Reflection 2 New findings in 2nd article A competitive market condition can force innovation o firms have to innovate in order to survive in a highly competitive environment. Negative relationship between technological competitiveness and age demographic o knowledge, especially in its tacit form, are more likely to be embedded in a younger population rather than an older one.

Reflection 2 Strategies for both China and India to improve their National Innovation Systems Invest more into their education systems o especially in high level education o improving the quality of education instead of the quantity Government regulation and support o China: developing high-tech industries o India: building additional and better communication infrastructure; increase the quantity of scientific outputs in India with incentives Demographics o India: young demographic indicates a relative advantage in technological competitiveness. try to maintain this young demographic with incentives for appropriate birth rate per family o China: be cautious about the aging of the population.

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