Although China is now the 'factory of the world', there is no reason to expect that it will always be content with manufacturing labor-intensive goods for foreign corporations. Scholars must now ask: What is the current level of innovation in China? And how can we face this challenge and renovate industrial production and innovation capacities in developed countries?
Global Innovation in Emerging Economies
This edited volume investigates the unique characteristics of Chinese innovation and regional development, China's policy framework, and the role that transnational corporations play in China's increasing innovation activities. This book contributes to the heated debate regarding pathways for technology progress and regional development in developing countries, and identifies the ways in which local production networks respond to different configurations of external linkages.
Linking patterns of global and local production networks with the trajectories of technology development and regional development allows the authors to theorize and test whether, and how, particular configurations of production networks generate divergent long-term local productivity growth and technological development outcomes. Innovation and Regional Development in China will be of interest to geographers, economists, China specialists, development specialists, and scholars working on innovation and regional development in developing areas and transition countries. Skriv anmeldelse.
Betal med gavekort her. Less technologically advanced firms tend to locate in geographical areas with any level of academic activity and high levels of industrial innovative activities. On the other hand, firms that are technologically more advanced tend to favor locations with high level of academic activity and avoid geographical areas with any level of industrial activity.
The academic and government sources produce more basic and less appropriable knowledge, which is less attractive to technologically less advanced firms. Technologically more advanced firms have greater knowledge base and are better able to benefit from spillovers from all sources. The scope and level of technological activities carried out abroad by MNCs are determined by the national capabilities of both home and host countries.
They also suggest that the MNCs located in leading centers in a particular industry tend to build up specialization on the basis of the local technological capabilities in host countries.
At the same time, MNCs located in less advanced centers tend to draw more on their home-based capabilities, by replicating their home specialization abroad. Developing countries seldom figured as locations for innovation activities.
According to Amsden et al. These countries will be dependent on the MNC for transfer of new technologies. According to Fagerberg , technological innovations do not flow easily across economic actors or distances as the generation and application of innovations are closely tied to specific firms, networks and economic institutions.
This strategic move by MNCs has been facilitated by the availability of large pools of scientifically and technically trained human resources, at substantially lower wages compared to their counterparts in industrialized countries, and an adequate infrastructure Reddy ; Reddy and Sigurdson However, the trend of locating innovation activities in emerging economies is likely to be strengthened as well as extended to more sectors.
With the collapse of the Soviet Union in the early s, a large pool of scientists and engineers with specialist knowledge from Russia and East European countries entered the global market for talent. Around the same time, some developing countries, particularly Brazil, China, India and South Africa, started liberalizing their economies for trade and investments. These countries started attracting the attention of foreign investors and MNCs not only for their large and rapidly growing economies, but also because of their technological capabilities.
These countries were seen as potential location for some innovation activities.
Over the last few decades, the difference in the relative innovative productivity of the most innovative countries e. Although there is still a gap in absolute terms between the former and the latter, the gap is relatively narrower now than it was about a couple of decades ago. Based on historical patterns in their innovative capacity levels, Furman and Hayes categorize countries into four groups: 1 leading innovator countries; 2 middle-tier innovator countries; 3 third-tier innovator countries; and 4 emerging innovator countries.
Innovation: A Guide to the Literature
Although not on a par with the most innovative countries, emerging innovator countries as a group have surpassed a number of countries who historically had greater wealth and technology than them. This trend was common across all subsets within the sample subsets: home country; highly dispersed versus less dispersed; users of complex versus noncomplex knowledge; and technology innovators versus the rest.
Only 13 percent of the new sites would be in Western Europe, closely followed by Eastern Europe with 12 percent.
South America attracted a five percent share of the new sites Doz et al. However, in India and Eastern Europe, companies are also attracted by the availability of highly qualified human resources. India and China continue to lead in the total number of new manufacturing jobs created through inward FDI; however, Vietnam is rising rapidly. India attained the first place in terms of manufacturing jobs created , , displacing China.
Vietnam doubled its total over the previous and tied with China at , jobs. Mexico and Eastern European countries have also benefited in terms of manufacturing jobs created. India attracted manufacturing particularly in the ICT and transportation equipment industries, whereas China and Vietnam were more successful in electronics. Mexico and Eastern Europe achieved higher than average on transportation equipment jobs.
With respect to jobs created by inward FDI in the services sector, India and the Philippines cornered the global shared services activity with 32 percent and 16 percent of such jobs, respectively. Brazil has also emerged as a strong regional shared services location. Presently, the need to reduce labor costs accounts for more than 90 percent of offshored outsourced innovation activity in emerging economies, but during the next 10 years this will be due to more strategic priorities: market access, resource quality, increased productivity and expanded capacity Dehoff and Sehgal , p.
Following its success, in Boeing opened an aeronautical engineering design center in Moscow. The center employs Russian engineers and scientists, and the number is expected to go up to 1, over time. As a sign of growing linkages among the emerging economies, the Russian teams have further outsourced some elements of their work for Boeing to Hindustan Aeronautical Limited HAL in Bangalore, India, which specializes in digitizing airplane designs to make them easier to manufacture.
Boeing has also outsourced design and manufacture of wings for its new 7E7 since then changed to aircraft to Mitsubishi in Japan. Mitsubishi, in turn, outsources some of its work to Russian engineers whom Boeing is using for other parts of the plane. Boeing is planning to buy shares in some of these start-ups Friedman , pp. As a further development, the aerospace giants Airbus and Boeing, who until recently were outsourcing only simple work like digitizing old hardcopy drawings, began to outsource more complex innovation activities to their Indian partners.
These Indian partners now employ their own aerospace engineers, many of whom accumulated several years of experience in the Indian state-owned aviation sector. For instance, Airbus contracted Infosys, an Indian IT company based in Bangalore, to design part of the wing of its double-decker plane A Airbus is also teamed up with another Indian IT company, Tata Consultancy Services, to build software for next-generation cockpits, which aims at replacing switches by touch screens.
Airbus subcontracted a third Indian firm to design and build doors for its jet planes. According to Airbus, Indian engineers at this high-tech center are involved in developing advanced modeling and simulation, covering critical factors in the design and production of aircraft such as A The center started with 25 engineers, and within a year it expanded to Together with employees of the suppliers of Airbus, the center now houses over 1, engineers and is expected to grow further in the future Dikshit This phenomenon is not confined to large MNCs alone; even the startups in the US have caught onto the idea of locating some innovation activities in emerging economies.
They provide important support for start-ups based in Silicon Valley. As an example, an Indian design engineer with a distinguished track record in leading US semiconductor firms founded a company, based both in California, and Ahmedabad, India. The company was founded to work as an offshoring broker to the US semiconductor industry. It began by testing designs, but now has expanded to provide everything from concept design to the development of silicon intellectual properties SIPs Ernst , pp. Globally distributed research teams across different cultural settings are able to exchange complex knowledge because the knowledge workers who share specialized skills e.
These include:. The patterns of MNCs locating their global innovation activities in emerging economies and the local companies in host countries becoming service providers are being accompanied by another new trend. The companies based in emerging economies traditionally competed in their own local markets by manufacturing products based on either adapted or locally improved technologies imported from abroad. In the cases where they exported such products, they mainly went to markets in other developing countries.
Their customer base was also different from those of MNCs and other companies from the industrialized world. These innovative products tend to compete for the same customer base of companies from industrialized countries across the globe: i either directly competing in the existing markets e. This new phenomenon has not been studied much as yet. For instance, a consumer using a scanner or a digital camera anywhere in the world today to convert documents into computer-readable and editable texts is most likely to use software developed by Russian engineers.
OP-ED According to Mathews , pp. They have succeeded mainly by leveraging their way into global markets through partnerships and joint ventures. The globalization process also includes a countervailing pressure by the periphery on the center, as organizations in the periphery are ready to exploit the new opportunities generated by the creation of global markets. This is easier for them than the firms from the industrialized world that are burdened by existing attitudes that make them treat the world market as their own home market.
Firms from emerging economies are also in a relatively better position to exploit certain home-based advantages, such as reserves of engineering talents available at substantially lower cost and low-cost manufacturing infrastructure Wong and Mathews , p.
Om Innovation and Regional Development in C
The causes for the emergence of these MNCs can be found in pull factors that draw firms into global connections, rather than push factors that drove firms as stand-alone players in the first wave. According to Yeung , p. In its survey results for , two Indian companies were ranked as being among the 25 Most Innovative Companies around the globe: Tata Group rank six for its product innovations and Reliance Industries rank 19 for its business models.
This is the first time any company from the emerging economies made the list Business Week Some of the Indian pharmaceutical companies such as Ranbaxy, Dr. Until a few years ago, these companies were only known for their notorious ability to produce generic drugs through reverse engineering of patented knowledge held by the pharma MNCs.
Brazilian firms such as Embraer and Petrobras are well-known for their global innovations.
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By turning local engineering excellence into innovation on a global scale, Embraer has become the third-largest aircraft company, focusing on regional jets. Apart from such giants, even Brazilian start-up companies are involved in global innovation.