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Smart Innovation Set

coordinated by

Dimitri Uzunidis

Volume 18

Innovation Systems in Emerging Economies

MINT – Mexico, Indonesia, Nigeria, Turkey

Vanessa Casadella

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Preface

Emerging markets are the subject of a great deal of economic literature. But, what are they emerging from? They certainly meet the common criteria of GDP increase or important structural reforms; but are these the only criteria to be considered to better understand their growth and development? The MINT, which stands for Mexico, Indonesia, Nigeria and Turkey, are not just emerging markets, but are characterized simultaneously by their heterogeneity but above all by their current dynamism.

Are they giants with feet of clay or actual promising economies? A more novel answer will be given here in terms of the structuring of their innovation system. Innovating does not mean creating new innovation processes or products. Innovating is diffusing, adapting and internalizing external knowledge to better reappropriate it locally. Innovating is also promoting more or less formal interactions between the players of the system. In these developing economies, it is also innovation in inclusive perspectives of poverty reduction and the goal of sustainable development. These goals are ambitious but actually necessary for the sustainability of their economy.

In preparing this book, we received input from several experts in development and innovation economics. We would especially like to thank Pascal Petit, Director Emeritus, for research at the Centre national de la recherche scientifique (French National Centre for Scientific Research), France, for proofreading the manuscript, and for his sound and detailed advice. The discussions we had enriched the analysis and contributed new arguments to the thesis defended in this book. We would also like to thank Dimitri Uzunidis, President of the Réseau de recherche sur l’Innovation (French Innovation Research Network) and Director of the Smart Innovation (ISTE Editions) series, for his unwavering guidance and valuable comments.

Emerging countries are the cornerstone of the new dynamics of the global economy. They are present as much in the economic news as in the geopolitical or media world; this emergence highlights “the characteristics of an industrialization underway with a rapid transition and high growth rates that translate into investment opportunities in a riskier economic environment than that of developed economies” [MES 16]. There are many acronyms that were rivaled by economists and investors to identify these countries with a high growth potential whose economic profile is very diversified. In the 1980s, the “newly industrialized countries” (NIC) rose in prominence, whose main characteristic is that their industry took off in the 1960s–1970s. The “Asian dragons” (South Korea, Singapore, Hong Kong and Taiwan) rapidly caught up with the level of growth of developed economies.

In the 2000s, with this in mind, Goldman Sachs suggested the BRIC acronym (2001) to designate Brazil, Russia, India and China as the rising economic powers, being called upon to challenge the designation of rich countries in the global economy. Several variations were proposed with the emergence of new economies (South Africa in 2011, and the new BRICS acronym). Despite their diverging interests, they constituted prominent political players in international summits (G20, IMF). Their catching-up process is such that they seem like new thought leaders, because of their growth potential and their trade development. BRICS have nevertheless experienced some vulnerabilities as a result of the increase in interest rates and the increase in barrel prices in the late 2000s. New acronyms were proposed to substitute the BRICS for other emerging economies.

Thus, the MINTs, represented by four countries (Mexico, Indonesia, Nigeria, Turkey), appeared at the same time as the CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey, South Africa) and the BENIVM (Bangladesh, Ethiopia, Nigeria, Indonesia, Vietnam, Mexico). In English, the term “MINT” implies a nearly new condition, suggesting the encouraging future of these economies. These MINTs were identified as countries that could take over from China, and other large economies emerged, showing their first signs of weakness. These four economies had the following common characteristics: good economic growth, a diverse economic profile, a large population, availability of raw materials and the commitment to pretty strong structural policies. Therefore, MINTs represent model students, with a dynamic demography and interesting economic perspectives.

Spread over four continents, the MINTs have nearly 644 million people, of which 127 million are in Mexico, 182 million in Nigeria, 78 million in Turkey and 257 million in Indonesia. One way of looking at the MINTs is understanding what they represent to their respective regions. Mexico, although it corresponds to only half the size of the Brazilian economy, represents the future of Latin America, with a high domestic demand and a good credit expansion. Indonesia, although smaller than the Indian economy and especially the Chinese economy, represents the growth potential for “Factory Asia”, the set of countries that build international value chains in this region. Turkey represents the growth potential of “Factory Europe”, the set of economic links that develop in the European periphery. The Nigerian economy, which seems particularly weak in comparison to the other three in this list, is likely to become the largest economy in sub-Saharan Africa, especially thanks to its oil activities. With Nigeria, economic growth should finally take off in Africa.

The MINTs are thus the perfect representation of new emerging economies. Should we, however, confine them to these four? Not necessarily. This is demonstrated by the fact that, on the choice of countries, Jim O’Neill apparently initially wanted to include South Korea, but the British channel BBC persuaded him to include Nigeria instead. This demonstrates the arbitrary character of the composition of these groups, which globalization and interconnections constantly shift.

It is difficult to establish a list of emerging economies, as existing classifications differ from each other and evolve over time. There is no official and unique definition of emergence, as it is used according to contexts and diverse stakeholders. Here, we chose the MINT, with the analysis of these four economies, identified as such among other emerging economies, in order to understand if these economic giants were well based in a conclusive and lasting dynamic, driven by innovation. While the praises showered on their growth potential are numerous, we wanted to analyze them through the lens of systemic innovation and competitiveness, and especially the national innovation system (NIS) concept.

In the past 20 years, the “national innovation system” concept has found an intellectual and practical consistency in academic circles, political contexts and international organizations. This diffusion of the method refers to the open nature of the NIS and its actual adaptability in view of various analyzed realities. Extended to the issue of developing economies and emerging economies, the NIS involves catching-up strategies through the development of technological capabilities. For this reason, it analyzes the development trajectories through the macroeconomic, political, institutional, social and historic environment. Research on NIS, despite the limited amount, has currently expanded to the whole of emerging and developing economies. That being so, the different studies generally carried out on similar countries favored NIC, or developed economies. Therefore, this work is doubly original, as it analyzes four emerging economies through the prism of innovation and competitiveness, and strengthens studies on NIS in emerging economies. Therefore, the problem that we have built around this book is the following: how are innovation systems built in Mexico, Indonesia, Nigeria and Turkey? Are they similar? Do they drive the growth of their innovation? Or, on the contrary, do they have no link to innovation strategies implemented? We think that these giants with feet of clay (completely different from each other) do not have much of an institutional or infrastructural foundation that is strong enough to persist and sustain over time, due to a lack of proactive policies geared toward innovation and knowledge.

The book will present itself in the following form: on the theoretical level, we will focus on the state of the art of work on NIS in developing economies and, especially, in emerging economies (Chapter 1), and on the empirical level, we will study the heterogeneity of these NIS in the MINT before concluding on the matter of the actual potential of the latter in a long-term trajectory (Chapter 2).

Vanessa CASADELLA

May 2018