Session 3: National Innovation Systems

1. Session 3: National Innovation Systems BUS 430 Summer 2013 Dr. Rajiv Krishnan kozhikode

2. Agenda • Fact book country pair assignments • Critical reflection report 1 • Critical reflection report 2 • National Innovation Systems

3. Factbook country pair assignment • India/China: Samantha Pinto 301087184 and Jiaxiao (Allen) Zhang 301173206 • Japan/South Korea: Dora Weng (301140048) and Laura Wang (301140016) • US/Canada : Xiaoyizhuang (30114713) and AfrakomaAmponsah (301150605) • Spain/Italy: Jennifer Zhang (301140087) and Candice Woods (301148654) • Germany/UK: Calvin Chan (301100479) and Peter Chen (301102971) • Argentina/Chile: Maryam HendiPakestani(301093313) and Hussam Sam Mofti (301104164)

4. Edith Penrose on National Innovation System • Technology and economic growth • Patent systems and Monopoly power • Industrialized vs. non-industrialized countries

5. Need for Protection of Intellectual Property • Technology has been key to economic development • Intellectual property is costly • It can be stolen • Important to protect IP • So, multinational seek patent protection to their intellectual property

6. But… • Poor nations need access to IP to grow… even sustain • Multinational patenting prevents poor and developing nations from accessing new technology • E.g., cure for killer diseases could be patented my multinationals • So stringent IP laws could be counter productive for poor countries that need technology badly to sustain.

7. Are Multinationals Cunning? • Multinationals get patent protection in a country even when they do not produce the end product in that country • Multinationals might be making tough bargains with governments of developing economies to give access to their patents • They do so to gain protection against competition who do not compete head to head but produce cheap knock offs and bring it to poor countries that cannot afford the high premium • Unfortunately, the inter-governmental organizations coerce the developing countries to sign patent treaties

8. What is the solution? • If patented in a country, should also produce in that country • Inventor certificates, instead of patents • Allows inventors to be independent of commercial firms • They stop innovation for being used for unfair purposes by multinationals that use them • Government buys the innovation and pays royalties to the inventor

9. Freeman on NIS and Catching Up • What is the role of innovation systems in economic growth? • Subnational and supranational innovation systems are different • Wealth of nations gives some hint but not enough • i.e., division of labor leads to efficiency and creativity (innovation) • Good governance systems that fosters industry is critical • Innovation perhaps plays a more central role • Systems that encourage innovation is key

10. Growth in Britain vs rest of europe • Great Innovation need not have been located in GB • But, scientific culture was encouraged in GB • Science, Technology and Entrepreneurship went hand in hand. • Science to technology • Technology to entrepreneurship • Was received well culturally too • Parliament vs monarchies • Fate of Galileo vs Newton • GB also gave agglomeration benefits due to presence of important transportation infrastructure • Some built, some natural

11. GB to USA • British Influence • Technology was bootlegged into USA • No Feudal system • Slavery was abolished (divided between USA’s south and the rest of USA) • Transportation infrastructure (Trains)

12. Catch up in developing economies • Asian dragon multinationals • Catch up around Japan (Taiwan and Korea) • Invested heavily in in house R&D and Education • South American catch up • Weaker due to lack of educational system • No recent example of catch up • So is slower always better? • Not always… • Indeed catch up is often seen as a miracle

13. That’s it for today • Next session we will look at: Comparative Political Systems