Innovation in Emerging Markets

Delivered: 12th December 2013
Teacher: Peter Gammeltoft

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Total signs: 34140, equals 15,006 pages 

Table of Content

1. Analyze and compare the national innovation systems of India and China. Identify and discuss differences. How have the two systems developed differently over time?        

2. Choose two industries, analyze and compare the role of foreign direct investment (FDI) in the development of the industry in India and China, respectively.        

3. Explain and discuss the role of innovation in economic development in general. Include also a discussion of potentials and risks of government intervention.        

4. Literature        [pic 3]

1. Analyze and compare the national innovation systems of India and China.
Identify and discuss differences. How have the two systems developed differently over time?

As huge developing economies, China and India have obtained significant positions in today’s global economy. Especially, during the 2008 international financial crisis, the two countries maintained a rapid growth momentum, showing a great future for development. For India this began back in 1991 when India started liberalization^[1], and since then there has been a growing interest, particularly since the late 1990s. Whereas the liberalization in China started back in 1979^[2].

It is stated by Viotti (2002) that “unwarranted use of the National Innovation System’s (NIS’s) approach to late industrializing economies could incur in serious shortcomings.” He later argues for the technical change in these economics and the industrialized countries. He also mentions that NIS studies are focused on Innovation, and not learning.

The NIS system gained ground as previous set theories were challenged by the economic development back in 70s and 80s. Where the rise of Asia, and the new competition they bring, the increasing importance of non-price competition on the product market, and the decreased productivity in the develop countries (industrialized countries) and the fight to get a stable economy.

First considering the Chinese economic transformation, where their focus was on re-shaping the division of labor and China’s interaction between its producers, users of innovation and knowledge. Back in 1956 through 1967^[3], they defined the formation of the NIS. Where China imported 156 industry facilities from Russia and started research facilities whose main focus was reverse engineering. This was the first sign of NIS in China, which was financed by the Soviet Union. Considering state-owned enterprises still only focused on manufacturing at this point.