In a globalising world, is there any value in the concept of a “National Innovation System”?
The progressive advancements in the different scientific fields and their applications in technology have become one of the most important corner stones for any nation’s wealth and economic growth.
For technology and scientific research to be successful in all aspects, including the organisation and the collaboration between the different players in each technological camp, different governments and public and private organizations reached the conclusion that a whole structure of communication and cooperation should be established in order to reach the desired successes in what concerns research, development and the technological objectives that are ultimately the driving force for any economy and societal well-being within a state.
One of the most important problems facing the policy making process was the lack of information regarding specific fields and the lack of knowledge in other fields. The need to have a certain kind of a long and constructive relationship between scientists and the technology specialists, on one side, and the policy makers, on the other, became more evident in the twentieth century as technological advancements (in all industrial fields and in sectors related to information technology) grew in extremely high speeds and in extremely high amounts. A stable and continuous flow of information concerning the ongoing changes that were (and still are) taking place in the research and development arena had to be maintained. This gave birth to the concept of National Innovation Systems which, in theory, should be the solution to the above mentioned problem.
The idea behind the concept that was evolving is thoroughly explained by Mytelka as she stated that
The 1970s and 1980s marked the passage from an era in which technological change was mainly incremental. Time was available to either amortize heavy tangible and intangible investments in new products and processes, or to catch up with a slowly moving technological frontier by mastering processes of production and distribution for what were relatively stable products. Protected national environments were both a blessing and a curse in that earlier period, since they provided time and space for infant industries to emerge but frequently little incentive for them to become competitive whether at home or abroad. At the same time, within the markets of developing countries, high levels of protection created the potential for oligopolistic market behavior by large, mainly foreign firms, which raised prices to local consumers and made exporting difficult. (15)
National Innovation Systems
The concept of ‘National Innovation System’ appeared as a prospective response to the necessity of having clear policies that shape the work and the interconnectedness between research, organisations, industries and governments in regards to science and technology research and the products that are expected to be received from that research.
An innovation system is the result of the processes of research and development in any science and technology related field. In this context, we can understand that the innovation system involves the distribution, or spreading, of the needed information and knowledge bases regarding a given technology between the various entities that require having them. This should cover the governmental organisations, the interested centres of research, the universities, the industries and even the individuals.
The need to create innovation systems on national levels became important in the 1970s and the 1980s. This is explained by Nelson and Rosenberg as they state the following:
The slowdown of growth since the early 1970s in all of the advanced industrial nations, the rise of Japan as a major economic and technological power, the relative decline of the United States, and widespread concerns in Europe about being behind both have led to a rash of writing and policy concerned with supporting the technical innovative prowess of national firms. At the same time, the enhanced technical sophistication of Korea, Taiwan, and other NICs (Newly Industrialized Countries) has broadened the range of nations whose firms are competitive players in fields that used to be the preserve of a few and has led other nations who today have a weak manufacturing sector to wonder how they might emulate the performance of the successful NICs. There clearly is a new spirit of what might be called “technonationalism” in the air, combining a strong belief that the technological capabilities of a nation’s firms are a key source of their competitive prowess, with a belief that these capabilities are in a sense national, and can be built by national action. (Nelson 3)
It is evident that the concept was originally created in order to give more advantageous steps to science and technology related entities in what concerns competitiveness and the ability to survive and grow both inside the borders of the country itself and as a strong product export bridge to other countries. The main objective in this regard is economical; each country is required to establish the most suitable environment for scientific research and technological structures to flourish and, by doing so, to strengthen the economy of the country and the living standards of its people.
The National Research Council defines ‘National Innovation System’ by stating that it “refers to the collection of institutions and policies that affect the creation, development, commercialization, and adoption of new technologies within an economy” (105).
Another definition is that “the National Innovation System is a systemic model that shows dynamic interactions and pattern of processes that facilitate technology flow in the system, incorporating variables and players from all directions that affect the innovation process” (Hulsink 16).
It must be noted here that the above mentioned process should contain, within it, all the elements leading to influence the whole technological sector within a country and this is specifically why there should be clear policies and laws regulating the way in which the system should function and how it should present the required results.
Factors leading to the creation of a successful national innovation system are presented by Biegelbauer and Borras: “A national innovation system is a whole set of factors influencing the development and utilisation of new knowledge and know-how”. The authors emphasise the fact that education is an important element in the process of creating and implementing the system in question (84).
For a national innovation system to be structured correctly, a thorough and comprehensive analysis should be performed on a national scale; this is because the system should be able to determine which elements are needed for growth and which policies are the most adequate. “National profiles are too complex and diverse to derive a unified representation of the system, posing the problem of defining and modelling the NIS. One useful way to deal with heterogeneous profiles of NISs is a taxonomic approach where national systems are classified into several categories” such as “large high-income countries, smaller high-income countries, and lower-income countries” or “large/rich countries, small/rich countries, and developing countries” (Park, Y. and Park, G. 403-404).
According to the Organisation for Economic Co-operation and Development, there are different policy making problems in what concerns the operational side of the national innovation system. “In General, the attention of policy makers moved away from an overall priority to fund the R&D input to the economy, with additions along the way to the market to enhance technology transfer” and a special care was given in what concerns encouraging the collaboration and the methods of networked work and “the flows of knowledge into spin-offs and industrial use, institutional change, entrepreneurship, and improved market oriented financial systems”” (14-15).
The document of the Organisation for Economic Co-operation and Development also explains that policy makers should take important factors into consideration, such as the relations and inter-dependences between a variety of market sectors, such as labour, capital, and product markets because they are the source of innovation and growth. Another important factor is that policies should also cover sectors that are not considered as related to markets, this can include partnerships in research and development activities (16).
The policies in what concerns the system in question, for it to be successful on a national level, should take into consideration a variety of elements and keep them under continuous scrutiny. These elements include the amount and the quality of the performed innovation, the continuous growth in manpower (for what concerns the technological production process) and in the population (in what concerns the use of the produce), the level of growth of the economy itself with all what comes with that concerning new challenges in regards to raw materials and the human factor, the ability of firms to move from one sector into the other, according to the changes in scientific and technological advancements, independently. This creates a huge amount of work for policy makers and scientists and technology experts alike in order to keep policies efficient and effective, on one hand, and in continuous evolution and change, on the other, according to the changes on the ground and according to the changes forced by outside factors.
National Innovation Systems & Globalisation
As clear from the concept’s name itself, the most important point to note is that it was created, and originally thought of, around the concept of a limited political and geographic entity; the country. It focuses on the ‘national’ aspect of the economical, scientific and technological sectors.
In today’s world, that is certainly different from that of the 1950s and the 1960s, many changes have occurred that transformed our lives because of the tremendous advancements in science and its direct applications in technology; this includes the way we make business, the way we create products and offer new services, the way the manufacturing processes of certain products take place, and the way information and knowledge are being distributed and reached. It is now more obvious than any point in time in the past that a national system in relation to science, technology, research and industry, no matter how policies are accurately prepared and implemented, cannot survive if the international (or the global) element is not taken into consideration and if it is not dealt with adequately.
Much less agreement exists… on how precisely globalization and innovation interact, and what this implies for industrial dynamics and a policy-oriented theory of innovation systems… An important weakness of innovation system theory is a neglect of the international dimension. There is a tendency to define a NIS as a relatively closed system, even when dealing explicitly with the impact of globalization. A central proposition rests on dynamic agglomeration economies: interactive learning requires co-location, hence a preference for national linkages. (Ernst 1)
Ernst illustrates his point of view around the most developed (and the most developing) sector of industry in the world today, which is information technology. He asserts that electronics equipment and components, software and information services, audio and video, and communication technologies (this includes e-commerce and web services) are all beyond the rigid understanding of the traditional national innovation system as was originally conceived by individuals, institutions, and governments.
The changes that happened in the last 25 years have brought new problems for the concept of national innovation system. According to Mytelk, this is due to two main factors: “First, over the past two decades, production has become more knowledge intensive across a broad spectrum of industries from the shrimp and salmon fisheries in the Philippines and Chile, the forestry and flower enterprises in Kenya and Colombia, to the furniture, textile and clothing firms of Denmark, Taiwan and Thailand. Second, competition has both globalized and become more innovation-based” (15-16).
It is, on the other hand, important to note that firms benefit from “sharing knowledge and reduce costs by jointly sourcing services and suppliers” This on-going process of knowledge exchange will always have a positive influence on all the procedures and results of the flow of information and knowledge and will create more opportunities for co-operation in research and developments experiences and projects. “Local training institutions and a sound infrastructure can provide further benefits for companies. Moreover, rivalry between firms can stimulate competitiveness. To note also that life quality and other non economic factors can be just as important in determining growth” (Carrin et al. 24).
It is necessary for the innovation systems to evolve according to the evolution of the various elements that shape research and technology today. For the concept of innovation system to survive with success, new factors should be introduced within its structure in order to enable it to keep its competitiveness and growth, keeping in mind that this should be done in a way that turns the changes that occurred because of globalization into advantages, not disadvantages.
Ernst draws our attention to the bright side, stating that “globalization enhances the dispersion of knowledge across firm boundaries and national borders. Such dispersion however has remained concentrated, due to the continuous impact of agglomeration economies” (30).
The idea behind the concept of national innovation system, just as anything other theory or structure, should evolve… And this is exactly what happened.
Scientific research, technological endeavours, and industrial successes do not depend on the organisation of institutions and on the flow of information within the national boundary alone, they interact with realities created and introduced by a newly shaping world with no borders and no geopolitical boundaries. The policies that deal with the flow and exchange of information and knowledge should deal with international effects and beyond-the-borders factors that can, and will, ultimately influence the national realities.
Since the time of the concept’s first presentation by Freeman (1987) and Dosi et al (1988), many changes took place in what concerns the analysis and the policies regarding its methods and implementation; this is due to the enormous changes that happened in the various scientific and technological fields.
The concept of national innovation system is a precious tool that should not be dropped because of globalisation; instead, it should be reshaped to cover the elements that did not exist previously. It should encourage the collaboration and the continuous flow and distribution of information and knowledge within the country itself, and then within the regional and international space.
NIS should be re-developed to cover national, regional, and multi-national corporational level.
Mytelka, Lynn K. “Local Systems of Innovation in a Globalized World Economy.” Industry and Innovation, 7.1 (2000): 15-32.
Park, Yongtae and Gwangman Park. “When does a national innovation system start to exhibit systemic behavior?” Industry and Innovation 10.4 (2003): 403 – 414.
Nelson, Richard and Nathan Rosenberg. “Technical Innovation and National Systems.” National Innovation Systems: A Comparative Analysis. Ed. Richard Nelson. New York, U.S.A.: Oxford University Press, 1993 3.
National Research Council. Harnessing Science and Technology for America’s Economic Future. Washington, D.C. U.S.A.: National Academy Press, 1999.
Biegelbauer, Peter and Susana Borras. Innovation Policies in Europe and the Us: The New Agenda Hampshire, England: Ashgate Publishing Limited, 2003.
Hulsink, Willem. Regional Clusters in ICT. Amsterdam, The Netherlands: Boom Publishers, 2002.
The Organisation for Economic Co-operation and Development. Dynamising National Innovation Systems. France: OECD Publications, 2002.
Ernst, Dieter. How globalization reshapes the geography of innovation systems. 24 May 1999. 06 September 2006.
Carrin, Bart, et al. Science-Technology-Industry Network. September 2004. 07 September 2006.