National Innovation Systems

Samantha Pinto 301087184 Jiaxiao Zhang 301173206

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 - 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 - 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 1Common 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

knowledgeo 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 1Compare China and India - India • Better higher education

o overall quality of higher educationo cultivating R&D professionals and intensifying its

scientific research• High-tech industries account for higher proportions in

India’s total GDPo 4.75% in India’s total GDP compared to only 4% for

China. o more knowledge based and innovative economyo better potential in becoming a knowledge intensive

economy.

Article 2

Determinants of National Innovation Systems: Policy implications for

developing countriesFrank 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 2Consistent findings with the 1st article• Importance of government regulation and support to improve a

country’s NISo creating and promoting an innovative cultureo giving clear instructions to the marketso 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 patentso 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 demographico knowledge, especially in its tacit form, are more likely to

be embedded in a younger population rather than an older one.

Reflection 2Strategies for both China and India to improve their National

Innovation Systems • Invest more into their education systems

o especially in high level educationo improving the quality of education instead of the quantity

• Government regulation and supporto China: developing high-tech industrieso 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 familyo China: be cautious about the aging of the population.

Questions and Comments

Thanks