Some conclusions of the BRICS Project,

1. Development Challenges in BRICS: Inequality and National Innovation Systems Some conclusions of the BRICS Project, summarized from the book ‘Development Challenges in BRICS: Inequality and National Innovation Systems’ organized by Maria Clara Soares, Mario Scerri and Rasigan Maharajh (forthcoming) Pretoria, March 2012

2. BRICS PROJECT Inequality and National Innovation Systems Background • Our efforts aimed to contribute to a better understanding of the dynamic inter-relations between innovation systems and inequality, building on the experience of the BRICS. • We adopted the broad view of the national systems of innovation (NSI) approach, proceeding from a co-evolutionary perspective. • Our belief is that improving the comprehension of the relationship between innovation systems and inequality may allow for: • the evaluation of different options for configuring technological and institutional change, and • for opening up the possibility for policies that promote development alternatives which normatively aspire towards greater equality and social cohesion • Concept of inequality: multi-dimensional character (beyond the mere income dimension; manifested through increasingly complex forms)

3. BRICS PROJECT Inequality and National Innovation Systems • The analysis of the co-evolution between innovation system and inequality tried to identify how (and whether) the diverse elements of the BRICS NSIs and inequality mutually reinforce each other. • Co-evolution perspective: • high degrees of endemic inequality shaping the evolution of national systems of innovation. • innovation systems reinforcing/undermining inequalities.

4. Change in Inequality Levels in BRICS early 1990s versus late 2000s (Gini Coefficient of Household Income) Source: OECD-EU Database on Emerging Economies and World Bank Development Indicators Database (2011)

5. Co-evolution: Inequality ► NSI • The origins of the current patterns and rates of inequality differs across BRICS systems: • South Africa: apartheid; India: discrimination on the basis of caste, religion, ethnicity or gender; Brazil: concentration of land and of political power; Russia: URSS collapse and extreme laissez faire variety of capitalism, dismantling soviet welfare system; China: accelerated evolution of a distinctly variety of capitalism widening gaps between rural and urban populations. • Despite these differences, the study showed that inequality is a peculiar trait of BRICS countries comprising a key factor for understanding both the configuration and the dynamic of their national innovation systems.

6. Co-evolution: Inequality ► NSI • Significant enduring inequalities severely restrict NSI development and compromise its long term dynamic limiting the broad based human capital & human capabilities (supply side), domestic systems of consumption (demand side), etc. • The structural nature of inequality in BRICS countries establishes it as an informal institution within the web which makes up their NSI.

7. Co-Evolution: NSI ► Inequality • The nature of the co-evolution of the NSI and inequality is obviously different for the five BRICS economies given their specificities. • It was seen that innovation systems can affect inequalities in different ways and through distinct paths, which are influenced by national conditions and shaped by public policy. • Despite the specificities, the common conclusion is that in the absence of appropriate policy measures, the evolution of NSIs in the BRICS - especially within the post-eighties context of market liberalisation - tended to reproduce, reinforce and even intensify structural inequalities.

8. Some policy findings • Distinct strategies for technological change may lead to different outcomes in distributive terms, thus either aggravating or mitigating inequality. • Mutual self-reinforcing mechanisms between innovation system and inequality (especially given long historical reinforcement) in BRICS forms the basis for a path dependent vicious circle of innovation. • This path dependency almost inevitably require State intervention to break vicious cycle. • Advancing the understanding of the inter-relations between innovation and inequality may be helpful to find ways to shape the evolution of NSIs so that they reduce rather than increase inequalities. • Inequalities need to be taken explicitly into account in the development & innovation strategies of BRICS countries.

9. Research Questions Project findings raised challenging research questions, among others: • Innovation is fundamental to economic performance as it helps to widen competitiveness. But how to make innovation also serve the purpose of social inclusion? • How to induce the direction of innovations recognizing the role of business as an agent of innovation, but simultaneously pointing to a pattern of innovation that enable articulating the social and economic spheres endogenously? • Which policy instruments should be used to stimulate demand for social innovation, assure the generation and diffusion of the solutions, and promote the accumulation of knowledge and production capabilities in a wide range of production sectors supportive to fulfilling social needs?

10. Research Questions • How to orient the transformation of productive structures rooted in a specific territorial dimension in a way that they favor the improving of livelihoods and social inclusion? • How to capture the specific characteristics, interactions, learning processes and the dynamics of inclusive innovation systems that usually stay ‘bellow the radar’ of public policy lenses? • How local innovation systems based on high levels of informality can contribute to improving livelihoods and achieving the goals of a more inclusive development? • How to transform marginal innovative activities into inclusive innovation systems with wider socio-economic impact? What kinds of networks and partnerships are needed? What role could governments play?

11. Thank you!

12. Broad set of questions • Questions linked how to better understand social inclusive innovation processes that already exists but stays below the radar of public lenses