Foreign direct investment and internationalization of R&D: the case of BRICS economies.

Foreign direct investment (FDI) is increasingly seen as an important source for achieving greater and faster economic growth and technology accumulation in many developing countries. There has been a good number of studies over the years on different aspects of FDI such as its impact on economic growth, its contribution to technology diffusion and human capital formation in the local economy, the factors that determine different level of flow of FDI to different countries, trade and technology development, and its costs and benefits (e.g. OECD, 2002; Wei, 2005; Chakraborty and Basu, 2002; Rajan, 2005). Some of these studies suggest that not only the volume and nature of FDI flow varies greatly across the emerging and less developed economies, but also their ability to absorb and benefit from them and how effectively they use FDI to enhance their national productive systems varies greatly. In this context, what is interesting to study is the increasing trend of locating and organising R&D by foreign companies in emerging market economies through FDI, particularly in the large emerging economies in Asia such as China and India. It appears that increasingly internationalization of R&D is considered an important vehicle to maintain competitiveness in the globalised economic environment. Because of this the attitude of large multinational corporations and other businesses have been changing towards the types of R&D operations being carried out outside their home base. This is illustrated by the development in recent years particularly in China and India, and to a lesser extent in other emerging market economies. Increasingly, not only the volume of R&D has increased but also the degree of complexity and higher value added. What this may mean is that a country that has a relatively functioning NSI can attract FDI in R&D that often TNCs were not willing to engage in the past. It seems clear that FDI for R & D and knowledge transfer means that the relationship between the TNCs and the local subsidiaries is changing. This has implication for economic development. The change may not be because the TNCs have changed their main logic for moving across the world, it may be related to the new stature achieved by continental-sized economies such as India and China. In other words as the NIS’ in these countries are relatively stronger and becoming more mature, they are able to manage and absorb the FDI flow better for achieving their socio-economic development goals. In this paper we will examine and analyse the domestic and external factors that are contributing to the increasing volume and complexity in international R&D inflow. We would argue that the capacity to attract international R&D is directly related to the degree of functioning of an economy’s national innovation system. That is, the weakness or strength of NIS influences the nature and volume of international R&D inflow through FDI. For this, we take the case of BRICS economies – Brazil, India, China and South Africa (excluding Russia). We aim to generate comparative insights by taking into account differences in the NIS across these countries and how that impact on the nature and shape of FDI in R&D in these economies. In this paper we also attempt to examine whether there are emerging sectors that are being opened by BRICS economies with changes to regulatory arrangements and incentives to attract international R&D flow thorough FDI. Conversely, we would also attempt to examine it from the side of the companies, corporations and their home base constraints that impel them to engage in internationalization of R&D through FDI. In other words, we would attempt to understand whether FDI is playing a significant role in specific sectors such as Telecom or IT in BRICS countries, particularly in China and India contributing to a dramatic shift in the world economy

The National technology system framework: Sanjaya Lall’s contribution to appreciative theory.

Sanjaya Lall has grappled with the dilemmas of development by concentrating his life-long research on technology, international trade, manufacturing and industrial development largely but not exclusively in the developing world. He constructed taxonomy on low technology; resource based products, medium technology intensive and high tech intensive products and tried to measure the challenges, opportunities and difficulties for resource based producers like the countries in Sub-Saharan Africa to enter into medium and high technology intensive manufactures. The rich empirical work undertaken on the developing economies, South East Asia and others has led him to formulate the appreciative concept of National Technology System (NTS). In this paper we distinguish between the development and relationship between formal and appreciative theories in general and the NTS and national system of innovation (NSI) concepts in particular. We shall attempt to examine, compare and contrast broadly Sanjay Lall’s appreciative NTS concept in relation to the national innovation system approach in the context of the debate for generating the appropriate and relevant heuristics to get clearer comprehension of the dynamics and processes involved in both technology acquisition and efficiency for economic competitiveness and development

The impact of the national innovation systems on the flow and benefits of foreign direct investment to national economics.

In the increasingly globalising economy, the flow of foreign direct investment(FDI) is seen as an important source for achieving greater and faster economic growth, particularly in the emerging market economies and other developing countries. Studies on FDI focus on different aspects such as impact of FDI on economic growth, its linkages to foreign trade, its contribution to technology diffusion and human capital formation in the local economy, its social and environmental impacts on host countries, the factors that determine different level of flow of FDI to different countries, the link between FDI and international production, trade and technology development. Such studies mainly highlighted that there are benefits as well as costs from FDI for the host countries (e.g. OECD, 2002; Wei, 2005; Chakraborty and Basu, 2002; Rajan, 2005). The benefits include technology spillovers, human capital formation, international trade integration, competitive environment, and enterprise development, and so on. The costs include balance of payment problems due to repatriation of profit, failure to link with local communities, negative impact on local environment, social destabilisation due to rapid commercialisation, impact on competition in national market, host country failing to benefit from technology and know how transfer, and loss of political sovereignty. Although it is found that the overall benefits are greater than costs, it is pointed out that benefits of FDI are not automatic, particularly for developing countries. It is suggested that these countries need to pursue appropriate policy regimes and should have “a basic level of development”. Various studies suggest that not only the volume and nature of FDI flow varies greatly across the emerging and less developed economies, but also their ability to absorb and benefit from them and how effectively they use FDI to enhance their national productive systems varies greatly. In this paper we would argue that this capacity is directly related to the degree of functioning of an economy’s national innovation system. If FDI is one key route for the introduction of knowledge, technology or innovation that is new to a national economy, it matters a lot how the network of institutions, ideas, policies, strategies, agents and incentives are organised, and work in tandem with logic and coherence and thus communicate and interact effectively to bring transformation. How well the latter are organised, interfacing the elements of the social-economic, productive and knowledge, intersectoralising the sectors and forging interdependent agents and structures is a question of the type of national innovation system (NIS) in place. FDI is not negative or positive a priori. Its role as positive or negative should emerge in relation to specific contexts and requires contextualising it within given national systems of innovation. And we propose that the weakness or strength of the system of innovation influences whether FDI’s contribution is negative or positive. A study of FDI in relation to how different national systems with varied capacities and characteristics or the strengths and weaknesses inherent in their NIS deal and cope with FDI can yield fresh policy insight on the type of changes that must take priority to benefit from flows of FDI. In this paper we analyse the nature of the flow of FDI in some selected emerging market economies such as China, India, South Africa and few smaller economies and its impact on these national economies. We analyse the volume, nature and characteristics of the FDI inflow in these countries and whether and how NIS has shaped the flow and the impact of FDI on these economies. We focus on the issue of managing and absorbing FDI to enhance national productive systems rather than whether FDI is positive or negative

Influence of national system of innovation on the trajectory of foreign direct investment.

The ability to absorb and use effectively FDI flows by countries to enhance their national productive systems is directly related to the degree of functioning of an economy’s national innovation system. We develop a heuristic NSI-FDI framework that proposed three types of NSIs (well functioning/strong, relatively well functioning, and weak) in relation with three types of corresponding FDI outcomes (High-end, Medium or Average, and Low-end). We then selected both large and small developing economies -- China, India, South Africa, Ghana, Ethiopia, Tanzania, and Zambia with both different NSIs and FDI flows. The countries were differentiated with respect to core differences in the types of NSIs. Using descriptive data we analysed the nature of FDI flows and their impacts or outcomes in these countries and showed that the characteristics of the NSI in these countries largely shaped the flow and the impact of FDI on these economies

Can the relative strength of the national systems of innovation mitigate the severity of the global recession on the BRICS?

The research question we wish to investigate is the degree to which different countries with differing levels of NSI strength and weakness cope in mitigating some of the adverse impacts of the recession. In general during the recession confidence declines or what Keynes calls the „animal spirit‟. Creative destruction is heightened as firms destroyed need to find other ways of recreating their economic activities. Exports and imports change. Investment from abroad declines and consumers afraid of the recession save or even hoard. Such a state is likely to impact those who are absorbing FDI and exporting to the heartland of the current recession which is the US market. China and India both export mainly hardware and software related goods and services respectively to this market where reduction in demand has resulted in company closures and unemployment. Even free trade has been challenged with protectionist and nationalist rhetoric on the rise during this recession. Given a recession that has affected the entire world economy and its constituent parts, both the way the recession impacts on different national economies and the ability of national economies to mitigate the recession are likely to be different. This paper concentrates on the latter not on the former per se. We examine what mitigating capability different national innovation systems have in relation to dealing with and responding to the current world financial and economic crises. The hypothesis we would like to test with descriptive comparative data is how far the relative strength or weakness of the NSI is capable of mitigating the adverse impact of the recession. We assume that that the nature and degree of impact of the recession across countries are likely to be different. In this paper we would like to take only the NSI factor in trying to account how such differences due to the individual characteristics of NSIs across different countries mitigate recessionary impact on given economies. For this, we propose to examine selected sectors from selected emerging economies such as China, India, Brazil and South Africa (BRICS excluding Russia) to estimate mitigating capabilities of different NSIs

The Making of the Indian national innovation systems: lessons on the specific characteristics of the domestic and the external co-evolutions of technologies, institutions and incentives.

India is one of the few large economies that have functioning national systems of innovation. It has followed largely a period when self-reliance and selective and guided intervention in the world economy prevailed until the early 1990s when liberalisation of the economy took off. Its economy now is growing at a nearly 8 % of GDP and is seen as an emerging economy on a par with China. The policy makers in India have asked: can India become a developed country by 2020? (see Kalam, 1998). India has tried to apply science and technology to industrialise agriculture and build a modern economy. To this day despite the splendid achievements, India has not escaped from underdevelopment, poverty and inequalities. The specification of the peculiarities and characteristics of India’s system of innovation by taking various indicators is critical to undertake. India’s strategy for building its national system of innovation has borne always a dualistic and lopsided feature in terms of priorities for science and technology selection and foresight, policies for supporting science, technology and innovation, creating institutions and their linkages, knowledge and learning, capability and training, diffusion and incentives. Despite its significant achievements in areas such as building strong industrial and R & D base, establishing a large number of science and technology institutions, and creating large pool of scientists and engineers, the Indian national innovation system has been criticised for its low quality manufactured good, and inability to eradicate poverty. Key issues taken up for this paper are

Towards a unified conception of innovation systems.

In this paper an attempt will be made to identify what has been explicitly recognised as central and peripheral within the systems of innovation concept; the inclusion or exclusion of the factors that are important in understanding the political economy of innovation systems; the themes, issues and range of actors and spaces that must be included in NSI types of appreciative theory or modelling. We suspect that those who focus narrowly tend to exclude important variables that must be included in the understanding of the making and development of innovation systems. Conversely those who focus broadly may include factors that may not be helpful in creating clarity of conception and understanding of the innovation systems application to the problems and challenges of development. It is thus important to reflect and review the variety of ways the system of innovation has been used by the economists who have used the NSI perspective in their search to develop alternative frameworks to understand the problems and challenges of economic system dynamics in general and economic development in particular. We will probe how the search for an alternative economic framework for economic development through the NSI perspective have been applied with a view to advance an argument for its judicious application as an intellectual conceptual tool to help understanding and explanation of the problems and challenges of development and underdevelopment. A unified conception of systems of innovation that includes not only history and culture but also the critical political factor that closely impinges and shapes policies on the economics of innovation will be attempted with a view to valorise the explanatory analytical power of the NSI framework in the context of its value in generating new insights, practices and applications to the general problem of economic development

Socio-economic contributions of an indigenous tree in urban areas of southwest Nigeria

Indigenous trees have been discovered to be disappearing from urban areas at alarming rates, and the contributions of the existing trees are not adequately documented. Milicia excelsa is an indigenous trees species in tropical Africa and popularly known as Iroko. Due to extensive exploitation for wood production and other socio-economic activities, the tree species is classified as threatened and relics could only be found in a few locations. A survey of the trees in the city of Ibadan was therefore carried out to determine their distribution as well as their socio-economic contributions to the urban people. A semi-structured questionnaire was administered to the people living close to the trees or working in the locations where the trees are sighted to determine the socio-economic benefits. A total of 65 trees (0.14 trees/km2) of M. excelsa were sighted. As observed in the city, the benefits of the tree species were categorized as: environmental, medicinal, economic, spiritual and ecological services. Provision of shade that creates a ‘microclimatic environment’ in the form of cooling effects from the heat of the day was mentioned by about 95% of the respondents as the major benefit obtained from the trees. A strategy for the conservation of the trees as urban trees and their protection against damage to life and property are considered imperative. There is also a need for an appropriate policy that protects indiscriminate felling of indigenous trees in the city and constant monitoring of the trees’ status for any sign of weakness.http://adonisandabbey.com/show_journal1.php?list_journals=14am2014gv201

Securing Africa’s health sovereignty : why investing in science and innovation matters

This paper aims at provoking broad-based dialogues and debates on ways and means of securing Africa’s health sovereignty. It argues that health sovereignty is about the realization of specific national constitutional and policy objectives on citizens’ access to and enjoyment of good health, resilient to COVID-19 and related disease pandemics. The paper also emphasizes the urgency of African countries fulfilling their commitments under global and regional declarations on health research. Investing in research, knowledge and innovation is critical to fight and win the war against COVID-19 and other diseases that undermine economic productivity and competitiveness of African countries. There is also a need for venture capitalists to demonstrate bankable ideas emanating from the science academies and funded by National Science Foundations. The base teachings at school level need to significantly invest in the “African philosophy” to create a shift in mind-set from the “grab and own without use mentality that is currently predominant on the continent. The paper recommends that executive, political and science leadership are needed to strengthen national health research and innovation systems through improved evidence-based policy implementation. With these thrusts working effectively together, rather than in silos, will afford the African continent to emerge victoriously in the combat against COVID-19 and other disease burdens

High seroprevalence of anti-SARS-CoV-2 antibodies among Ethiopian healthcare workers

BACKGROUND: COVID-19 pandemic has a devastating impact on the economies and health care system of sub-Saharan Africa. Healthcare workers (HWs), the main actors of the health system, are at higher risk because of their occupation. Serology-based estimates of SARS-CoV-2 infection among HWs represent a measure of HWs' exposure to the virus and could be used as a guide to the prevalence of SARS-CoV-2 in the community and valuable in combating COVID-19. This information is currently lacking in Ethiopia and other African countries. This study aimed to develop an in-house antibody testing assay, assess the prevalence of SARS-CoV-2 antibodies among Ethiopian high-risk frontline HWs. METHODS: We developed and validated an in-house Enzyme-Linked Immunosorbent Assay (ELISA) for specific detection of anti-SARS-CoV-2 receptor binding domain immunoglobin G (IgG) antibodies. We then used this assay to assess the seroprevalence among HWs in five public hospitals located in different geographic regions of Ethiopia. From consenting HWs, blood samples were collected between December 2020 and February 2021, the period between the two peaks of COVID-19 in Ethiopia. Socio-demographic and clinical data were collected using questionnaire-based interviews. Descriptive statistics and bivariate and multivariate logistic regression were used to determine the overall and post-stratified seroprevalence and the association between seropositivity and potential risk factors. RESULTS: Our successfully developed in-house assay sensitivity was 100% in serum samples collected 2- weeks after the first onset of symptoms whereas its specificity in pre-COVID-19 pandemic sera was 97.7%. Using this assay, we analyzed a total of 1997 sera collected from HWs. Of 1997 HWs who provided a blood sample, and demographic and clinical data, 51.7% were females, 74.0% had no symptoms compatible with COVID-19, and 29.0% had a history of contact with suspected or confirmed patients with SARS-CoV-2 infection. The overall seroprevalence was 39.6%. The lowest (24.5%) and the highest (48.0%) seroprevalence rates were found in Hiwot Fana Specialized Hospital in Harar and ALERT Hospital in Addis Ababa, respectively. Of the 821 seropositive HWs, 224(27.3%) of them had a history of symptoms consistent with COVID-19 while 436 (> 53%) of them had no contact with COVID-19 cases as well as no history of COVID-19 like symptoms. A history of close contact with suspected/confirmed COVID-19 cases is associated with seropositivity (Adjusted Odds Ratio (AOR) = 1.4, 95% CI 1.1-1.8; p = 0.015). CONCLUSION: High SARS-CoV-2 seroprevalence levels were observed in the five Ethiopian hospitals. These findings highlight the significant burden of asymptomatic infection in Ethiopia and may reflect the scale of transmission in the general population