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Structural Transformation and Innovation Systems: industrial dynamics and innovation systems a value

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BRICS portrait: population, area, density, total and per capita ... Non-ferrous metals. 2.3. Fabricated metal products. 3.9. Machinery,except electrical. 9.8 ... – PowerPoint PPT presentation

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Title: Structural Transformation and Innovation Systems: industrial dynamics and innovation systems a value


1
Structural Transformation and Innovation Systems
industrial dynamics and innovation systems (a
value added approach)
  • Prof. Luciano G. Coutinho
  • Prof. Mariano Laplane
  • NEIT/IE - UNICAMP

Globelics BRICS Workshop Aalborg February 2006
2
BRICS portrait population, area, density, total
and per capita domestic product
3
BRICS and selected countries Gini index/ social
unequality
Source UNDP
  • Is the highly unevenly distributed income a
    serious development problem for Brazil and South
    Africa? Is China increasing social unequality a
    problem for the future?

4
BRICS growth performance in the last 25 years as
well known...
  • China is the worlds fastest growing economy in
    the last 25 years, with a very high investment
    rate
  • Brazils economy has shown an irregular and
    mediocre performance, well bellow its potential
  • India since the nineties GDP is growing quite
    well and more regularly however it can do better
  • Russia after the deep crisis of the nineties
    (disorganization of the state-socialist economy)
    oil prices have helped an economic recovery

5
BRICS growth performance in the last 25 years as
well known...
  • South Africa GDP growth performance has improved
    slowly, however well bellow its potential as
    investment lags behind
  • Korea GDP growth is high in per-capita terms and
    its per-capita income has approached the level of
    a developed economy
  • Mexico plugged to the US economy it shows a
    relatively weak performance, below its potential

6
Annual average growth rates of total real GDP ()
7
BRICS gross fixed capital formation ( GDP),
1970-2003
Source NEIT-IE-UNICAMP from BIRDs World
Development indicators
8
Industrial performance and growth
  • China spectacular GDP growth is certainly
    related to the high competitiveness of its
    manufacturing system
  • Brazil, Russia, South Africa manufacturing has
    lost relative importance and weight
    international competitiveness has faltered
  • India manufacturing has grown, on average, at
    the same pace of GDP

Question is an improvement of manufacturings
competitiveness an important factor for long term
growth?
9
BRICS manufacturing value added ( GDP), 1993
and 2003
10
Growth and competitiveness
  • East-Asian economies have grabbed an additional
    13 percentage points of world trade in the last
    25 years
  • Chinas performance is, by far, the more dynamic
  • Brazils share of world exports has stagnated
    (with a slight recent improvement)
  • India has also shown some moderate improvement
    from a low start basis
  • South Africa has lost relative importance in
    world exports
  • Russias recent improvement related to oil and
    gas price boom

Apparently, global competitiveness has been a
key factor for fast growth
11
Evolution of market share of world merchandise
exports
Value of Exports
Country
1980
1990
2003
2004
Developed Countries
65,3
72,0
64,8
63,1
Developing Countries
29,5
24,3
32,1
33,5
. Latin America Caribbean
5,5
4,1
5,0
5,1
. Brazil
1,0
0,9
1,0
1,1
. Mexico
0,9
1,2
2,2
2,1
. Developing Asia
18,0
16,9
24,7
25,8
. West Asia
9,9
3,9
4,1
4,4
. Russia
-
-
1,8
2,0
. South Asia
0,7
0,8
1,1
1,1
. India
0,4
0,5
0,8
0,8
. East Asia
7,1
12,0
19,4
20,1
. China
0,9
1,8
5,8
6,4
. Rep. of Korea
0,9
1,9
2,6
2,8
. Africa
5,9
3,2
2,4
2,5
.South Africa
1,3
0,7
0,5
0,5
Memo PED's excl. first-tier NIEs and China
24,8
14,8
16,8
17,4
Source UNCTAD
12
BRICS share in world manufacturing value added
(1993-2003)
  • China has doubled its share in global
    manufacturing (in value added terms)
  • Indias manufacturing share grew but its relative
    size is yet small
  • Brazil and Russia their manufacturing systems
    have lost share in the world economy however
    some improvement is taking place after 2003
  • South Africas share in global manufacturing has
    stagnated

13
BRICS and selected countries share in world
manufactured value added, 1993 and 2003
Source UNIDO
14
BRICS manufactured value added per capita (95
constant US), 1993 and 2003
The evolution of manufacturing productivity seems
to be in line with overall growth performance in
manufacturing
15
  • Competitiveness in manufacturing high tech
    products seems to be a relevant driver of fast
    growth and yet an even more important factor for
    a strong export record
  • China has almost quadrupled its share of worlds
    high tech production. It has surpassed Korea and
    is now equivalent to Japan!
  • India has shown important advance but her share
    in high tech products is still small
  • Brazil and Russia have shown a stagnant
    performance in worlds manufacturing of high tech
    products
  • South Africas presence in high tech is quite
    small

16
BRICS and selected countries share in world
high-tech products exports (), 1993 and 2003
17
BRICS and selected countries high-tech products
share in countries total exports (), 1993 and
2003
Source NEIT-IE-UNICAMP from UNCTAD primary data
18
Growing importance of high-tech sectors in
Chinas economy (two tunnels strategy)
  • Chinas industrial system has diversified
    extraordinarily in the last 25 years it has a
    very large intermediate goods base (steel,
    cement, petrochemicals) and a very large
    non-durable consumption goods sector. In recent
    years the development of durable consumption
    goods and of high-tech sectors (computers,
    consumer electronics, etc.) has speeded up
  • High-tech products already accounts for 36 of
    Chinese exports (2005)
  • Employment in high-tech sectors is growing fast
    and has accounted for 19 of the total in 2002

19
Growing importance of high-tech sectors in
Chinas economy (two tunnels strategy)
  • China has escalated RD expenditures from 0,6 of
    GDP in the mid nineties to almost 1,9 last year
  • Enrollment in high education (specially in
    engineering) has expanded very rapidly, as well
    as students pursuing graduate studies abroad
    (circa 150 thousand)
  • Chinas recent record in global patent
    applications is impressive

20
China manufacturing employment ( total
manufacturing employment), 2002
Rubber and Plastics products

Source UNIDO
21
Selected countries RD expenditures (/GDP),
1996 and 2001
22
Selected countries enrollment in high education
as a of the total, 1990 and 2000
23
BRICS and selected countries stock of patent
applications, residents, 2001
24
Comparison of manufacturing structures
  • Whereas the share of high-tech sectors in
    manufacturing (value added) ranges between 14
    and 17 (automotive-complex included) in Brazil,
    Russia, India and South Africa it has attained
    circa 35 in the case of China
  • By the same token, employment in high-tech
    sectors varies around 8,5 of the total
    manufacturing employment (for Brazil, Russia,
    India and South Africa) whereas in China it
    represents 19
  • If the automotive-complex is excluded the share
    of employment in high-tech sector (to Brazil,
    Russia, India and South Africa) would vary from
    2,6 to 5,5 of the total

25
Comparison of manufacturing structures
  • Relative shares of so-called traditional
    consumer-goods manufacturing (e.g. food and
    beverages, tobacco, textiles and wearing apparel,
    leather products and footware) are higher in
    Brazil, India, Russia and South Africa
  • On the other hand, the relative shares of natural
    resource-based and of primary commodity-based
    manufacturing is quite different among the BRICS,
    reflecting different geography and natural
    endownments

26
BRICS manufacturing structure (share in
countries MVA), 2002
27
BRICS manufacturing employment ( total
manufacturing employment), 2002
28
Different manufacturing profiles
  • Russia a very strong defense-related industrial
    complex, specially in aeronautics space a
    large production-base in non-electric machinery
    and equipment a powerful manufacturing complex
    related to oil and gas
  • Brazil a broad set of competitive
    natural-resource-based and agricultural-based
    manufacturing (steel, non ferrous metals, pulp
    and paper, wood products, sugar and ethanol,
    orange juice, soya-derivates, coffee) a fairly
    diversified durable-consumption goods industry
    one leading firm in the aeronautic sector

29
Different manufacturing profiles
  • India a very large service-economy, her
    manufacturing capability is relatively small and
    concentrated in basic non-durable consumption
    goods (textiles and wearing apparel, food and
    beverages) with the exception of a strong
    chemical and chemical products-complex the base
    of intermediate goods production is relatively
    small, as well as the automotive-complex
  • South Africa has a powerful mineral
    resource-based industry (steel and non-ferrous
    metals) and her manufacturing system is
    concentrated in non-durable consumption goods
    (food and beverages, tobacco, textiles and
    apparel) relatively strong in the automotive
    sector

30
Innovation and ST Systems
  • Russia strong position in high education, with a
    powerful scientific system particularly dedicated
    to space and defense-related activities
    expanding RD expenditures and patent activities
    are related to the former specializations
  • India an expanding scientific system with good
    quality but very weak in industrial RD (and
    patenting) employment of highly qualified human
    resources biased towards services (IT related)
  • Brazil an improving scientific system (with good
    international rating) RD activities are very
    uneven and concentrated, with some success cases
    (like in agribusiness) patent activity is weak
    some key sectoral innovation systems have been
    disintegrated in the nineties

31
Innovation and ST Systems
  • South Africa very weak RD and industrial
    innovation activities limited scientific
    capability
  • China a remarkable effort in building up a
    national scientific and technological innovation
    system as a purposeful strategy RD activities
    growing at a very fast pace given the increasing
    economic importance of high-tech sectors

32
BRICS recent export performance with remarkable
improvement of foreign exchange position
  • Chinas large trade surplus derived from her
    highly competitive performance in manufacturing
    exports and
  • Very favourable terms of trade (prices of oil,
    metals and other commodities) in last three years
    have helped Brazil, South Africa, Russia and
    India to strengthen their foreign exchange
    position

Question could this recently gained foreign
exchange robustness help to put in place new
national development strategies? Or could it
result in indulgence (in relation to current
performance and to the historical record)?
33
Recent external robustness
Reserves/external debt ()
External debt/exports ()
Source JP Morgan, Consensus Forecasts and
projections.
34
Recent external robustness
External debt service/exports
Source JP Morgan, Consensus Forecasts and
projections.
35
Are there domestic financial constraints?
  • Brazil and Russia their banking systems had
    retracted but can they expand in order to finance
    capital formation? How can the capital market
    help?
  • Issues how to create reliable institutional
    conditions and juridical protection for
    investors, creditors and for securitized
    assets?
  • China how to cope with the low risk-standards of
    the banking system? Is there a role for the
    capital market?
  • India how to enhance the contributions of both
    (bank credit and capital market)?
  • South Africa is everything fine? What is lacking
    to accelerate private investment?

36
Financial Structure outstanding domestic debt
securities, stock market capitalization and bank
credit, 2004
37
Outstanding Domestic Corporate Debt (Securities)
38
Some lessons and questions for research
  • There is not a single development model to be
    mimetized. The Chinese model may elicit many
    useful lessons but cannot be automatically
    copied. An interesting view-point how did the
    Chinese successfully copied many of the Korean
    strategies (of the 70s and 80s)?
  • The strengthening of competitiveness and
    innovation in manufacturing seems to be a
    necessary condition for a better long term growth
    performance

39
Some lessons and questions for research
  • Keeping up and developing new competitive
    conditions in low and medium tech intensive
    sectors, such as to allow for dynamic trade
    performances and for the creation of employment
    opportunities, seems to be a wise strategy for
    BRICS
  • Innovation (including DUI and STI modes),
    education and skill-apprenticeship (thru
    experience and thru training) should be a key
    focus for promotion of local development, as
    sub-regional promotion policies seem absolutely
    prioritary to BRICS efforts to reduce social and
    regional unequality

40
Some lessons and questions for research
  • How to take advantage of existing capabilities
    and of revealed competitive (sub-sector/niche)
    activities to capture dynamic potential of the
    high-tech sectors? In other words, how to build
    up from existing competitive advantage (however
    scarce) in high-tech?
  • How to take full advantage of the ICT-revolution
    as smart users/adaptors (to the rest of the
    economy)? How to avoid the risks of
    info-exclusion?
  • How to capture/explore new opportunities in
    activities/niches/services related to ICT waves?
    How to create some fundamental conditions (what
    are they?) in order to minimize policy-risks?

41
Some lessons and questions for research
macro-questions
  • Are the fundamental macroeconomic conditions
    ready for building up a new national development
    strategy? From the outlook of the
    foreign-exchange position the answer seems to be
    yes, but how about the fiscal and financial
    conditions?
  • Are there sufficient political and societal
    aspiration and cohesion around a new (potential)
    development strategy? Is such national strategy
    consistent and clear enough?
  • What are the critical challenges to be surpassed
    in order to reach it?
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