Modes of Innovation and the BRICS National Systems ofInnovation

Mario Scerri

1. Introduction

The BRICS grouping has emerged as a collection of largeeconomies (excepting South Africa) which are outside thetraditional groups of industrialised “first world” economies.The countries belonging to this group are remarkable not onlyfor their size but for their growth rates over a period which,following the financial and economic crises, have seen thetraditional economic centre experiencing negative or at beststagnant growth rates. The impact of the BRICS on the globaleconomy should however be assessed on levels other than theobvious ones of size and novelty. The question that is askedin this paper is whether the BRICS phenomenon constitutes, orholds the possibility of constituting, a rupture in theevolution of the global system of innovation or whether itrepresents the emergence of a new variety of capitalism with ahigh degree of structural continuity within the existing worldorder. The approach adopted to address this question is a“modes of innovation”1 framework which traces the role playedby the five constituent economies of the BRICS in theprogression of the globally dominant modes of innovation andproduction. The following section sets out the basis of themodes of innovation framework while the one after that seeksto locate the BRICS systems of innovation within thisframework. The final section provides brief appraisal of thepossible impact of the BRICS grouping on the evolutionaryprospects of the global system of innovation.

Professor of Economics and Senior Research Fellow, Institute for EconomicResearch on Innovation (IERI) and Centre of Excellence in Scientometricsand STI Policy, Tshwane University of Technology, South Africa1

My use of the term “modes of innovation” is distinct from its common usagein innovation literature as referring to two types of learning andinnovation, primarily applied at firm level (see, among others, Jensen etal, 2007).

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2. Modes of Innovation

A national system of innovation (NSI), in its broadinterpretation, is seen as the web of institutions (formal andinformal) within which new knowledge is produced, introduced,adapted, absorbed, diffused and deployed within nationallydefined borders.2 The NSI approach, whose modern articulationdates from the seminal texts of Nelson and Winter (1982),Lundvall (1992), Nelson (1993) and Freeman (1995) provide arigorous rebuttal of the explanatory power of neoclassicaleconomics, especially in the area of economic dynamics. Thisrevolution in the orientation of the discipline does not havean ideological grounding, except by proxy due to theunwarranted twinning of neoliberal economics with theneoclassical paradigm.3 The looseness of this approachimplicitly allows for a wide range of ideologicalappropriations, from a market oriented neoliberal positioningto a Marxian account of the evolution of systems ofinnovation. While this potential variety in the orientationof this approach, akin to that in classical economics, is atestimony to its analytical richness, the common lack of anexplicit articulation of a particular take on this approachcan be theoretically and normatively confusing. Fine andRustomjee (1996: 244) recognise this when they propose thatthe

“(NSI) framework is unduly descriptive in content, merelypointing to the various institutional components drivingtechnical change, albeit breaking with received notions

2 “…the elements and relationships which interact in the production,diffusion and use of new, economically useful, knowledge ... and are eitherlocated within or rooted inside the borders of a nation state.” (Lundvall,1992), and “...a set of institutions whose interactions determine theinnovative performance ... of national firms.” (Nelson, 1993)3 Chang (2001: 11) argues that “(n)eoliberalism emerged out of an ‘unholyalliance’ between neoclassical economics, which provided most of theanalytical tools, and what may be called the Austrian-Libertariantradition, which provided the underlying political and moral philosophy[Footnote in text: ‘I say an .unholy alliance., because the gap betweenthese two intellectual traditions is not a minor one, as those who arefamiliar with, for example, Hayek’s scathing criticism of neoclassicaleconomics would know”.

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in orthodox economics. However, it can be complementedby a specification of the dynamic of capital accumulationassociated with a particular NSI”.

However, the required theoretical grounding of the NSIapproach in Marxian economics requires more than thespecification of the accumulation regime for a particular NSI.It should be based on specific articulation of the foundationsof the NSI approach from a Marxian perspective. In order todevelop this articulation we would have to revisit the theoryof value, specifically the labour theory of value, from aninnovation perspective. If the broad version of the systemsof innovation approach4 is adopted as a starting point andinnovation is defined broadly enough to include all changes inthe organisation of economic activity which are seen to be animprovement on the current state, we could then placeinnovation at the core of the national economy. Schumpeter(1934) opened up innovation to range far beyond technology,while March and Simon (1993), and Williamson (1985) introducedbehavioural and organisational theories of firm behaviour asexplanation of the sources of innovation. Johnson (1988) andNorth (1990) bring in the broader institutional framework andinstitutional change to the core of the analysis of dynamicsystems. The combination of these broad perspectives on themeaning of innovation can therefore expand the term toencompass all changes within dynamic systems.

In this sense the “knowledge economy” becomes an empty termsince all economies become by definition “knowledgeeconomies”; attention should rather shift to the “learningeconomy” (Lundvall, 1996, and Archibugi and Lundvall, 2001) tocapture the dynamic evolutionary aspect of systems ofinnovation. On this basis labour power, the “capacity to dowork” (Fine and Saad-Filho, 2004: 22), may be seen as theknowledge content embodied in labour at all levels of skills.From this perspective even the most apparently unskilledlabourer, say someone digging a ditch, is an embodiment of allpast streams of innovation and accumulated knowledge whichhave gone into the very concept of the ditch itself and themanner of the labourer’s engagement with the ditch. The4 See Cassiolato and Lastres (2008) and Lundvall (2010) for an elaborationof the broad systems of innovation approach.

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various historical streams of innovation culminate in theproduction of goods and services, in the tools of theirproduction, and in the forms of coordination of the economiesof their production. Labour is still central to this theoryof value but is now rendered as human capability, in the senseused by Sen (1999) and seen as the source of innovation whichdefines value. The fragment in the Grundrisse on the pervasiverole of knowledge in the political economy is worth quotinghere:

“Nature builds no machines, no locomotives, railways, electrictelegraphs, self-acting mules etc. These are products of humanindustry; natural material transformed into organs of the humanwill over nature, or of human participation in nature. They areorgans of the human brain, created by the human hand; the power ofknowledge, objectified. The development of fixed capitalindicates to what degree general social knowledge has become adirect force of production, and to what degree, hence, the conditions ofthe process of social life itself have come under the control ofthe general intellect and been transformed in accordance withit. To what degree the powers of social production have beenproduced, not only in the form of knowledge, but also asimmediate organs of social practice, of the real life process.”(Marx, 1973: 706)

Raniero Panzieri and the operaismo school argue that theimplications of this fragment from the Grundrisse indicates ashift in the “source of value” away from labour, as instandard Marxism, to knowledge (Keucheyan, 2013: 83-85). Thisformed the basis of the concept of “cognitive capitalism”which was developed by the operaismo movement and the perceivedshift from labour to knowledge as the base of value in theeconomy brought in a kind of categorical divide in the ranksof labour. With the emergence of cognitive capitalism adifference was posited between knowledge workers and materialworkers which is essentially tied to the nature of the productor output that a worker produces, depending on whether it istangible or an “immaterial” service. Hardt and Negri (2000:290) define immaterial labour as “... labour that produces animmaterial good, such as a service, a cultural product,knowledge or communication”. At the higher end of the “valuechain” of labour Negri and Hardt (ibid: 291) quote Reich(1991) in identifying immaterial work as “problem-solving,

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problem-identifying and strategic brokering activities”. Thiscategory of labour has also been called the “cognitariat”, aterm created by Peter Drucker and adopted by Antonio Negri toindicate purely mental or artistic workers who are stillworkers subject to the same relations of production as workersin general. Cognitive capitalism with knowledge as its valuebase marks a break in the evolution of capitalism equivalentto that between industrial capitalism and mercantilecapitalism which preceded it (Boutang, 2008: 48). This breakis evident in the increasing side-lining of the traditionalinput categories of labour and capital, with a possibledistinction between skilled and unskilled labour. The inputclassifications which are now seen to be more relevant in theera of cognitive capitalism are hardware, software, wetwareand netware.

This classification of labour is, as already mentioned, tiedto the nature of the product of labour which defines itsmateriality or otherwise. However, if all output is eventuallyaimed, through various intermediate stages, at finalconsumption then the exploration of the nature of finalconsumption may be opportune. Consumption is conventionallytied to tangible products or services which in neoclassicaltheory typically yield individual welfare effects through apresumed utility function. Kelvin Lancaster (1966) providesan alternative account, still within the parameters ofneoclassical economics, of the fundamental nature ofconsumption by proposing that use value (to take some libertywith the neoclassical concept of “utility”), is derived fromvectors of characteristics yielded from consumption activitieswhich combine a number of inputs in a manner analogous to theneoclassical production function. Purchased goods andservices form only a portion of these inputs and are notthemselves the direct source of use value. Other inputsinclude the time and effort spent in the consumption activity,the stock of human capabilities relevant to the consumptionactivity, as well as the social and cultural context which toa large extent determines the sets of characteristicsassociated with specific consumption activities. This accountessentially alters the nature of consumption in manner whichimplicitly renders all consumption immaterial and, if this

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proposition is accepted, the distinction between material andimmaterial labour becomes increasingly vague and possiblymisleading. The posited shift in the value base of the economyfrom labour to knowledge is a similarly misleading dichotomyanchored in the implicit assumption of the possibility of theseparation of knowledge from labour. The alternative accountdeveloped here is that labour is inseparable from knowledgeand that all labour is immaterial by virtue of the nature ofthe final objective of production which is essentially anactivity yielding characteristics which form use value. Theargument here is that the acknowledgement of cognitivecapitalism as a distinct stage of capitalism, even perhapsconstituting the ‘total paradigm shift’ proposed by Boutang(2011: 48), does not imply the categorical divide betweencognitive and other (non-cognitive?) labour.5 Andre Gorzshifts the value base of the economy to knowledge when hestates that “the exchange-value of commodities, material orotherwise, is no longer determined in the last instance by thequantity of generalised social labour they contain but mainlyby their content in terms of general information, knowledgeand intelligence” (Gorz, 2013: 34-35, emphasis added). Thismay indicate the shift in the manner in which labour power isappropriated with the end of embedded liberalism and theincreasing demand that labour “produces itself” (Gorz, 2013)but this should not reflect on the tenet that knowledge andinnovation may be seen as always having formed the base ofeconomic value.

Cognitive labour, in this case defined to include all labour,is combined with conventional means of production as well asthose factors which are directly engaged with the productionof knowledge to produce the streams of innovation whichcoalesce into inputs into consumption activities. Togetherthese comprise the means of innovation and the patterns of theownership and control of the means of innovation, inconjunction with other associated characteristics, define5 “…as a cognitive activity, labour is the main characteristic and, broadlyspeaking, the essence of man. By definition, human labour is an activitythat reunites within it both thought and action (which) are tightlyentangled and embedded, and remains distinct from any repetitive andinstinctive activity performed by other living creatures” Vercellone (2005:2-3).

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particular modes of innovation. These other characteristicsare grouped into the following sets:

a. the patterns of ownership and control of the means ofinnovation which both form and are a product of the specificinstitutional relations which underpin any given politicaleconomy,

b. the pace and nature of technological changec. the human capabilities requirements of the NSId. the power relations between labour and capitale. the periodisation of the evolutionary stages of the global

political economy with which a prevalent mode of innovationis associated

These various characteristics are inter-determinate in theformation of specific modes of innovation, with complex andmultidirectional causalities, and feedback and reinforcementmechanisms. Over time these systems also exhibit recurrentcrises which to a large extent determine the transitions fromone mode to another. The related sets of characteristics arelaid out in Table 1 in relation to three modes of innovationwhich are loosely tied to different stages in the evolution ofglobal capitalism. The early industrial mode marks thetransition from merchant to industrial capitalism. Thistransition was ushered in by the techno-economic paradigmshift introduced with the invention of printing and the massproduction of books (Febvre and Martin, 1976), termed byAnderson (1983) as “print capitalism”. Wallerstein (1983: 19)proposes that “...the genesis of (historical capitalism) islocated in late-fifteenth-century Europe, that this systemexpanded in space over time to cover the entire globe by thelate nineteenth century...” while Arrighi (1994) identifiesfifteenth century Venice as the prototype of moderncapitalism. This mode covers the first industrial revolutionand ends with the beginning of the second one. The matureindustrial mode sees the rise of the modern public corporationwith the separation of ownership and management, and theemergence of a bifurcation of the global system of economiccoordination with the rise of the Soviet Union. The post-industrial mode arises with the collapse of the Soviet Union,the global hegemony of neoliberal economics and the associated

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variety of globalisation. It is marked by the rapidlyshifting knowledge or ‘immaterial’ component of economicoutput and the transition to ‘cognitive capitalism’ where aclaim is made that the ‘economies of learning’ have superseded‘economies of scale’ as a determinant of productivity(Boutang, 2008: 52).

From the perspective of the NSI, the control over the means ofinnovation in the post-industrial mode may be understood asthose sets of factors which enable a particular nationalsystem to act as a locus of a range of innovation activities,from invention, to adaptation, absorption, diffusion anddeployment within its national borders. This type of controlis based on ‘sticky’ pools of tacit knowledge, and informalnetworks and institutions which have become the maindeterminant of persistent and emerging nodes of corecompetencies and competitive advantage in a globalised economy(see Maskell and Malmberg, 1999). In the post-industrialphase of largely unregulated globalisation and the de-nationalisation of corporations this type of control hasbecome more important than ever as a determinant of thespatial specification of the economic core and periphery.

The classification of the rate and direction of technologicalchange is linked to specific modes of innovation as a partialdeterminant of each mode. The other determinant consists inthose shifts in the geopolitical order which manifest not onlythe changing power bases of states and political/economicblocs but of ideologies. The balance of these two sets ofdeterminants is historically specific. Broadly speaking, wecan propose that the shift from the early to the matureindustrial mode of innovation was largely driven by thetechnological breakthroughs of the second industrialrevolution with implications for the nature of imperial powerand its shift towards extractive colonisation, specificallywith respect to Africa. The shift from the mature industrialmode of innovation to the post-industrial one may have beenfacilitated by the historically unprecedented rate of techno-economic paradigm shifts but the global hegemony ofneoliberalism and the type of globalisation with which is now

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associated with it are the outcome of the collapse of theSoviet Union.

Although these modes are represented as historical stages anyone mode may be the more relevant for specific NSIs. In factseveral modes may be exhibited in a particular NSI.Individual NSIs can therefore be analysed in terms of theirrelationship to a globally dominant mode of innovation. Wealso need to keep in mind that the classification depicted inTable 1 refers to capitalist modes of innovation and in thecase of the mature industrial mode of innovation excludes themode of innovation which evolved in the communist blocs overthe greater part of the twentieth century. Thecharacteristics categories which would be primarily affectedwhen considering what we may term the ‘socialist mode ofinnovation’ are the patterns of the ownership/control of themeans of innovation, technological change and labour/capitalpower relations. Within this alternative mode of innovationthe state owned and controlled the means of innovation,deploying them in the rapid industrialisation of economies,especially those of the Soviet Union and the People’s Republicof China. Technological change was driven entirely by thestate in pursuit of strategic political and economicprogrammes. By definition labour relations were formed inconfigurations which were categorically distinct from thelabour-capital dichotomy.

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Table 1: Capitalist modes of innovation and their characteristicsMode of innovation

Ownership/control of themeans of innovation

Technological change

Human capabilities requirements

Labour/capital powerrelationship

Periodisation of the global political economy

Early industrial

equation of the ownership and control of the means of innovation

preceded by the advent of printcapitalism

increasing rate of incremental innovation

widely spaced radical innovations

infrequent techno-economic paradigm shifts

shift from artisan to factory labour

proletarisation and the emergence of thebourgeoisie

state backed formation of a capitalist mode of accumulation

rapid increase in resource requirements

preceded by state sponsored voyages of discovery and trade

age of enlightenment industrial revolution the emergence of

national identities and the formation of European states

the age of imperial powers and the establishment of the hegemony of the ‘west’

Mature industrial

separation of ownershipand management

diffusion of the ownership of means of production

managerial labour and the rise of the technocracy

the bifurcation of the world economic order with state ownership and control of the means of innovation in socialist economies

‘big science’ and the R&D pushin the private sector

in-house research leadingto formalisationof the R&D function

the microelectronicsrevolution

increasing skills requirements

the formalisation of human capital formation through broad based education

the rise of SET higher education

scientific management (Fordism and

growth of organised labour

‘embedded liberalism’ and the welfare state

the post-colonial period and the emergence of new countries

post-colonial ties and the emergence of neo-colonial dependencies

re-definition of centre-periphery

the cold war and the bi-polar global political economy

protectionism Bretton Woods and the

regulated global financial markets

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Taylorism)Post-industrial

transnational (private) control of the means of innovationaccepted as the global norm

global diffusion and the de-nationalisation of ownership

the co-option of managerial labour into the capitalist class

the shifting national grounding of control over the means of innovation

the global sourcing of the human means of innovation

increasing frequency of radical innovations and techno-economic paradigm shifts

accelerating codification of knowledge

ICT, nanotechnology and biotechnology, robotics and automation, and short batch production runs

the ‘economies of learning’

the emergence of formal cross disciplinary education

rapid obsolescence rate of human capital

the end of life time jobsand careers

global sourcing of human capital

the worker as the continuous“producer of himself”

erosion of organised labour

the displacementof state provision by outsourcing and privatisation

the erosion of welfare safety nets and the normalisation ofprecarious life

globalisation ofcapital and the localisation of labour

start marked by the end of Bretton Woods,the crisis of the Keynesian economy andthe collapse of the Soviet Union

the hegemony of the neoliberal paradigm

global financial and real economy integration

the erosion of the economic integrity ofthe nation state

the emergence of economic blocs

global financial and economic crises

Source: developed from Scerri (2013)

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3. Modes of innovation and the economies of the BRICS membercountries

The placement of the BRICS grouping within the globalprogression of modes of innovation may be undertaken on twolevels. The first is the examination of the historical partplayed by the individual economies of this grouping, beforethey were constituted as a group, in the evolution of theglobal system of innovation. The second level, which will bedealt with in the following section, will be a tentativeassessment of the current and possible future effect of theBRICS group on the globally dominant mode of innovation.

Historically, the emergence of the Soviet Union opened up abifurcation in the progression of the global economy with theimplementation of a socialist mode of innovation on acontinental scale, a rupture which was reinforced,approximately three decades later, by the formation of thePeople’s Republic of China. For the greater part of thetwentieth century the existence of the Warsaw Pact and thePeople’s Republic of China acted as the counter-hegemonicfront to the geopolitical and ideological dominance of themature industrial capitalist mode of innovation. Whateverthe internal contradictions in the mode of innovationdeveloped in the Soviet bloc, which would eventually help leadto its collapse, its main global role was to offer analternative which was not only praxis but which, in its oftentortuous evolution, altered economic theory across the globe.

The collapse of the Soviet Union and the Soviet economy, alongwith the dissolution of COMECON, and the manner in which ithappened spelled the geopolitical death knell of the counter-hegemony to the capitalist mode of innovation. There were twomain reasons for this. In the first place, it is doubtful ifrealpolitik would have allowed one side of a polarised world toimplement the extreme form of a liberalised global economywhich would have been unthinkable even within the phase of themature industrial mode of innovation in capitalist economies.Secondly, the logical non sequitur which linked left wingeconomic policies in general with the Soviet model severelycurtailed the influence of Marxian theory on the role of thestate in the economy for most governments around the world.

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It dramatically shifted the ideological base of most leftleaning parties towards the now apparently “pragmatic”dictates of neoliberal economics, as happened with thetransformation of the British Labour Party under Blair. Morethan any technological advance it brought about the post-industrial mode of innovation, with the increasinglyderegulated financialisation of global and local economies,and the unfettered global sourcing of all economic inputs,including labour. Moreover, the terrible lesson of thecollapse of the Soviet economy and its aftermath also alteredfundamentally the directed evolution of the Chinese system ofinnovation towards a new variety of capitalism with anaccelerating integration into the post-industrial mode ofinnovation.

The modes of innovation preceding the socialist modes of theSoviet Union and the People’s Republic of China had both beenpredominantly feudal modes in two imperial powers. Bycontrast, the other three members of the BRICS group are allex-colonies, formed and defined at their origin by imperialpowers. These countries in their respective spheres came to benodal points in postcolonial history. Brazil along with otherLatin American countries has provided one of the strongesttheoretical bases for development economics, broadly branchinginto the two Marxian based, structuralist-reformist andMarxist-revolutionary schools (Kay, 1991). India, the largestmulti-party democracy in the world, also provided analternative of a largely state directed inwardindustrialisation development programme for almost the firstforty years after independence. The formation of the Union ofSouth Africa in 1910 saw the start of a white dominatedpostcolonial era during which state driven industrialisationstarted the shift of the base of the NSI away from a virtuallytotal dependence on resource extraction. The installation ofapartheid after the Second World War came at the dawn of thepostcolonial era in most of the rest of the world and spannedover the emergence of the post-industrial mode of innovation.While the country’s system of science and technologyflourished, driven by military R&D, the evolution of its broadsystem of innovation was crippled by the blocks set byapartheid legislation and practice on the development of broadbased human capabilities (Scerri, 2009). The neoliberal

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macroeconomic planning framework which marked the start ofdemocracy in South Africa did little to correct for systemicfault lines in the NSI which had developed over four decadesof apartheid. The end of apartheid in South Africa heldsignificant implications which ranged across Southern and sub-Saharan Africa. The transition from the Organisation ofAfrican Unity (OAU) to the African Union (AU), and theconstitution and implementation of the New Partnership forAfrica’s Development (NEPAD) as the technical planning andcoordinating body of the AU emerged with the end of apartheidand the corresponding re-orientation of continentalorganisations. The end of apartheid also led to the formationof the Southern African Development Community (SADC) with theprominent initiative of former frontline states incollaboration with South Africa. South Africa, the smallestNSI in the BRICS grouping should therefore implicitlyrepresent the presence of sub-Saharan Africa.

The extent to which these five NSIs have shifted to the post-industrial mode of innovation may partially be reflected inthe trends of their research allocations, as reflected in theratio of gross expenditure on research and development (GERD)to their GDP. This may provide a crude indication of a movetowards a stronger national base for the control of the meansof innovation. These trends are shown in Table 2.

Table 2: GERD/GDP (%) for the BRICS economies and the EU

Country YEAR

2003

2004

2005

2006

2007

2008

2009 2010

Brazil0.9

60.9

00.97

1.01

1.10

1.11

1.17 1.16

China1.1

31.2

31.32

1.39

1.40

1.47

1.70 1.76

India0.7

10.7

40.78

0.77

0.76 na na na

Russian Federation

1.29

1.15

1.07

1.07

1.12

1.04

1.25 1.16

South Africa0.7

90.8

50.90

0.93

0.92

0.93

0.87

0.76*

EU** na na na1.77

1.77

1.84

1.92 1.91

Sources: World Bank data at

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http://data.worldbank.org/indicator/GB.XPD.RSDV.GD.ZS/countries?display=default, accessed15 April 2014.* NACI (2014). ** OECD data base athttp://www.keepeek.com/Digital-Asset-Management/oecd/science-and-technology/main-science-and-technology-indicators-volume-2012-issue-1/gross-domestic-expenditure-on-r-amp-d-gerd-as-a-percentage-of-gdp_msti-v2012-1-table2-en#page1, accessed 15 April 2014.

The two countries which show the strongest upward trend areChina and Brazil. The indicator for India remains relativelyconstant over the five years for which data are available,while the one for Russia shows a fluctuating performance. Inthe case of South Africa we see a rapid deterioration over thelast two years. This measure is of course too aggregate toprovide anything more than a crude indicator of the shiftingknowledge base of the various economies but it is interestingto note the measure for most of the BRICS compares reasonablywell with the indicator for the EU as a whole. The rates ofgrowth of this indicator for China and Brazil over the eightyear period are especially impressive when compared to thebehaviour of the EU indicator. Other science and technologyindicators which may be used as rough proxies for thedeepening technological base of the different NSIs in theBRICS are provided in the appendices. Patent data filingrates have increased consistently in all of the BRICS over theperiod 1998-2012 (except for South Africa), with China showingthe fastest rate of growth (Appendix 1). Patent grant data(Appendix 2) show that in the case of Russia by far thegreater portion of patents which were granted had beenconsistently filed by residents throughout the fifteen yearperiod. This is probably due to the historical development ofa strong research base and the training of scientists andengineers prior to the formation of the Russian Federation.The case of China, the only other BRICS member where patentgrants to residents outweighs those granted to foreigners, isaltogether different. It is not just the sheer magnitude ofpatents which is remarkable by the BRICS standards. The dataalso show an exponential rise in patents over the period witha reversal of the resident/non-resident ratio of patentsgranted since 2009 and an accelerating increment in theproportion of local origin in the approved patents figures.

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Table 3: Knowledge Economy Index (KEI) and Knowledge Index(KI) - 2012

Rank

Changein ranksince2000 Country KEI KI

EconomicIncentiveRegime Innovation Education ICT

55 9 Russia 5.78 6.96 2.23 6.93 6.79 7.1660 -1 Brazil 5.58 6.05 4.17 6.31 5.61 6.24

67 -15South Africa 5.21 5.11 5.49 6.89 4.87 3.58

84 7 China 4.37 4.57 3.79 5.99 3.93 3.79109 -6 India 3.06 2.89 3.57 4.5 2.26 1.9

Source: derived from World Bank data at http://info.worldbank.org/etools/kam2/KAM_page5.asp

Table 3 depicts the Knowledge Economy Index (KEI) andKnowledge Index (KI) values for the BRICS economies. The KEIis a composite of sets of indicators reflecting (a) indicatorsof the incentives offered by the economic and institutionalregime for the efficient use of existing and new knowledge andthe flourishing of entrepreneurship; (b) the education andskills levels of the population; (c) an efficient innovationsystem of firms, research centres, universities, consultantsand other organisations; (d) information and communicationtechnology. The KI is a composite of indicators sets (b), (c)and (d) while the “knowledge economy index” adds on the marketgrounding of the knowledge system. It is interesting to notethe high placing of South Africa in these two indices,especially given its ranking in terms of other S&T indicators.The reason for this apparent discrepancy is indicated by thevalue of the “economic incentive regime” for South Africawhich is significantly higher than for the rest of the BRICS,indicating an unusually market friendly political economy.

A final indicator of the narrowly defined NSI for the BRICS isprovided in Figure 1 which shows high technology exports (highR&D intensity) as a proportion of manufacturing exports.

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Figure 1: High technology exports as a percentage ofmanufacturing exports

Source: derived from World bank data athttp://data.worldbank.org/indicator/TX.VAL.TECH.MF.ZS

Figure 1 clearly shows the ascendance of the Chinese NSI, notonly in terms of size or of its export led growth but in thehigh knowledge intensity of its export base. However, theindicators discussed above refer to the narrow science andtechnology version of the NSI and can be seriously misleadingas indications of the capacity of the broader NSI to adapt tothe post-industrial mode of innovation. The contradictionsinherent in the general capitalist mode of innovation areinescapable throughout the BRICS economies.

Figure 2 (Soares, Scerri and Maharajh, 2014: 8) - Change inInequality Levels, Early 1990s versus Late 2000s*: GiniCoefficient of Household Income**

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0,0 0,1 0,2 0,3 0,4 0,5 0,6 0,7 0,8

India

China

Russian Federation

Brazil

South Africa

Late 2000s ( )↘

Early 1990s

Note: * Figures for the early 1990s generally refer to 1993, whereasfigures for the late 2000s generally refer to 2008. ** Gini coefficients are based on equivalised incomes for OECDcountries and per capita incomes for all EEs except India and Indonesia forwhich per capita consumption was used.Source: OECD-EU Database on Emerging Economies and World Bank DevelopmentIndicators Database (2011)

Measures of inequality, depicted in Figure 2 provide oneindicator of the tensions which could accompany the rapidgrowth of the BRICS. The one notable exception to the trendsportrayed in Figure 2 is Brazil where the Gini coefficient hasdeclined. The case of South Africa is surprising not onlybecause of its high levels of inequality but also by the factthat inequality has increased over time. One would haveexpected a downward trend in the Gini coefficient given thatthe country emerged from a system of legislated racialinequality. This is a testimony of the effects of theneoliberal macroeconomic policy course after South Africa’sliberation from apartheid, whose basic tenets, in the absenceof an explicitly articulated alternative paradigmatic base,still permeate policy formulation. The results of this policyare manifest in growth rates which, while low by the averagestandards of the other BRICS economies, are still considerablyhigher than those of industrialised economies but which areaccompanied by increasing income inequalities and the failureto shift the base of the economy away from the minerals-energy-complex developed through its pre-democratic history.India has become a typical case of economic growth which hasfailed to address broad based human development on a number of

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fronts, such as infant malnutrition and mortality rates,female literacy, sanitation, schooling and other humandevelopment indicators; in most of these indicators Indiacompares badly with other countries in South Asia which haveshown far lower economic growth rates (Drèze and Sen, 2013).The political collapse and disintegration of the Soviet Union,and the virtually overnight swing from a centrally planned toa privatised economy effectively meant the destruction of anNSI. The birth of the new NSI of the Russian Federation cameabout under conditions of hyperinflation, rocketing poverty,and the dismantlement and private appropriation of stateassets (Zaichenko, 2014). The continued eruption of politicaltensions and conflict among former Soviet states has alsomarked the evolution of the Russian NSI with troublingimplications for its regional interactions.

This is not to say that individual BRICS economies have notintroduced alternative paths to growth as options to theglobal economy. Table 4 shows the behaviour of the HumanDevelopment Index (HDI) for the BRICS which shows animprovement for all member countries since 2000. In the caseof Brazil, the Bolsa Família and other welfare measures in theneo-structuralist approach to economic policy, which haveresulted in an enviable combination of falling inequality anda rising quality of life, are reminiscent of the “embeddedcapitalism” (see Harvey, 2005) which had virtually disappearedfrom the centre of capitalist economies by the mid-nineties.With a strong dependence of its economic growth on a growingdomestic market, Brazil’s programme of “growth withdevelopment” has good prospects of being sustainable. Chinais similarly striving to address the rising inequalitiesgenerated by its rapidly transforming economy, while its HDIhas shown the most dramatic increase over the past couple ofdecades. However, the contradictions posed by a growth pathwhich is overwhelmingly reliant on export markets (withdomestic consumption at under 35 percent of GDP) createserious problems of instability. China’s future growthprospects in the time of an endemic global recession mayincreasingly rely on its success in slowing rising inequalityor even reversing it so as to expand the domestic market forits huge industrial output.

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Table 4: Human Development Index trends for the BRICSeconomies

Country

HDI 1990-2000Average AnnualHDI Growth

2000-2012Average AnnualHDI Growth

1990

2000

2007

2012

Brazil 0.590.66

9 0.71 0.73 1.26 0.73

China0.49

5 0.590.66

20.69

9 1.78 1.42

India 0.410.46

30.52

50.55

4 1.23 1.5Russian Federation 0.73

0.713 0.77

0.788 -0.23 0.84

South Africa0.62

10.62

20.60

90.62

9 0.01 0.11

World 0.60.63

90.67

80.69

4 0.64 0.68Source: derived from UNDP data base, athttps://data.undp.org/dataset/Table-2-Human-Development-Index-trends/efc4-gjvq, accessed 25 April 2014.

The HDI values for the BRICS, as well as their rates ofgrowth, compare well with the global average, except forIndia whose HDI is well below this benchmark and South Africawhose rate of growth of its HDI, as well as its value, is alsobelow that of the world average. The HDI is not only anindicator of the quality of life of the population but, from amode of innovation perspective, it also serves as an indicatorof a country’s stock of human capabilities. In this regard,the poor performances of South Africa and India holdparticularly worrying implications as to the capacity of thesecountries to develop their economies up the global valuechain.

4. Concluding remarks

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The emergence of the BRICS economies as a distinct grouping istypically a product of the geopolitical order associated withthe post-industrial mode of innovation. All five of themexhibit a mix, to varying degrees, of the mature industrialand the post-industrial modes of innovation. In this sensethe rising global prominence of these five NSIs, in terms ofthe orthodox measures of economic performance, is a finalratification of the global dominance of the capitalist post-industrial mode of innovation. The question which strikes tothe core of the issue of the role of the BRICS grouping in theevolution of the global economy is whether the BRICS as agroup will form a strong countervailing economic power basewithin the broad framework of global neoliberalism or whetherit can constitute a base for the emergence of an alternativeeconomic coordination paradigm. It is of course much tooearly to assess the BRICS group on this issue but we mayspeculate on possible eventualities.

The BRICS group could stay on as a loose association forming anotable global economic bloc. Here the size of the BRICSmatters as is evident in the proposed BRICS development bank.This is a historic challenge to the monopoly power of theWorld Bank and the IMF as the global financial institutions.This is in itself a major countervailing geopolitical/economicpositioning but still lies within the broad framework ofglobal capitalism. A further development would be for alearning process to develop wherein the individual BRICSeconomies may, within the limits imposed by their structuraldifferences, learn from policy and practice in each other’seconomies. Here Brazil and China may provide valuablelessons, specifically with respect of the management ofeconomic growth within the framework of the human developmentrequirements for a transforming NSI. Brazil’s policyprogramme has yielded evident progress on this front withstrong indications that its structural inequality and povertyare being systemically addressed, while maintaining the paceof the transformation of its NSI. China’s deepening concernwith the dangers of its overly export-based growth hasstimulated an intense exploration of remedial policies aimedat addressing inequality and poverty in order to dampen risingsocial and political tensions and provide a more stable base

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for its economic expansion. A successful policy learningprocess could eventually provide an alternative developmentmodel to the extreme form of a neoliberal economic globalregime which is currently dominant. This could create theconditions, through a global demonstration effect especiallyin the developing world, for a new mild bifurcation within thepost-industrial mode of innovation.

Beyond this, it is hard to imagine a deeper rupture in thecurrent evolutionary path of global capitalism which canemanate from the BRICS. The relative successes of theindividual BRICS economies is now apparently written as theresult of an engagement with the new globalised economy, withChina as the main case in point in this regard, having emergedfrom a closed system to the world’s second largest economyover a mere three decades. Regardless of its varioustravails, the high growth rates of the Indian economy and itsincreasingly visible presence in the world economy are seen asthe result of its liberalisation policies since the mid-eighties, forgetting the innovation capacity which was builtover the decades of protection before that. The terribleeconomic devastation of the nineties in Russia has now beensuperseded by the growth of its economy since the turn of thecentury. Like Russia, the democratic South Africa was born atthe apex of the global neoliberal hegemony and, while thereare clear indications that systemic human capabilityconstraints are not being addressed, the country can stillreport positive GDP growth rates. The success of Brazil insystemically addressing the material conditions of life of itspopulation along a development trajectory which, from a systemof innovation seems, increasingly sustainable can, and has,also been interpreted as another variation of the ‘third way’policy repertoire. It is therefore difficult to imagine acredible geopolitical alternative to a capitalist mode ofinnovation arising from the members of the BRICS group,whether individually or in unison.

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Appendix 1: Intellectual Property Filings and economic growthrates for the BRICS economies

Brazil

Source: WIPO Statistical Services athttp://www.wipo.int/directory/en/details.jsp?country_code=BR

Russia

23

Source: WIPO Statistical Services athttp://www.wipo.int/ipstats/en/statistics/country_profile/countries/ru.html

India

Source: WIPO Statistical Services athttp://www.wipo.int/ipstats/en/statistics/country_profile/countries/in.html

China

Source: WIPO Statistical Services athttp://www.wipo.int/ipstats/en/statistics/country_profile/countries/cn.html

24

South Africa

Source: WIPO Statistical Services athttp://www.wipo.int/ipstats/en/statistics/country_profile/countries/za.html

25

Appendix 2: Patent grants by source for the BRICS economies

Brazil

Source: WIPO Statistical Services athttp://www.wipo.int/directory/en/details.jsp?country_code=BR

Russia

26

Source: WIPO Statistical Services athttp://www.wipo.int/ipstats/en/statistics/country_profile/countries/ru.html

India

Source: WIPO Statistical Services athttp://www.wipo.int/ipstats/en/statistics/country_profile/countries/in.html

China

27

Source: WIPO Statistical Services athttp://www.wipo.int/ipstats/en/statistics/country_profile/countries/cn.html

South Africa

Source: WIPO Statistical Services athttp://www.wipo.int/ipstats/en/statistics/country_profile/countries/za.html

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