Mitigating impact of national systems of innovation on the severity of the global Rrcession: comparison of selected Asian economies.

The research question we wish to investigate is the degree to which different Asian countries with differing levels of NSI strength and weakness cope in mitigating some of the adverse impacts of the recession. What we mean by mitigating capability is the ability of NSI to deal with and respond to unforeseen or foreseen crisis that could be induced internally or externally or by the combination of both domestic and internationals factors. In our previous
research (Baskaran and Muchie, 2009), using descriptive comparative data, we examined how far the relative strength or weakness of NSI within the transition economies of the BRICS (Brazil, India, China, and South Africa – excluding
Russia) is capable of mitigating the adverse impact of the recession. The early evidence emerging from these case countries suggested that the nature and degree of impact of the recession in these economies are different. We attempted
to show that these differences are mainly due to the nature and distinct characteristics of the NSIs in these economies other things being equal. We would like to add new insights relating NSI to coping with the impact of current
recession of the global economy through further research into selected Asian economies and comparing them.
For this, we employ a heuristic conceptual framework which presents a taxonomy of NSIs as: (i) developed/matured; (ii) transitional/learning; and (iii) nascent/weak; and also identifies 6 major sets of NSI components: (i) General
investment climate and economic policy framework; (ii) Market, per capita income, and domestic savings; (iii) Industrial structure; (iv) Financial Institutions; (v) Foreign Trade; and (vi) Skills, R&D and Technology development. The degree of strength of these NSI components and interaction between them will make an NSI as either developed/matured, transitional/learning, and nascent/weak. The important issue we are highlighting here is that although there are many similarities between systems of innovation, there are also differences related to the stage of development, characteristics of NSI evolution, path dependency, institutions, laws, policies, and incentives.
These in turn are likely to have either strong, relatively strong or weak mitigating impact on recession. We attempt to show this by selecting two case countries to represent each type of NSI in our conceptual framework and
comparing these three sets of economies (in all, 6 countries). We are contributing by adding to the existing body of NSI literature by linking NSI framework to its potential mitigating impact on recession in national economies.

DIR Research Series, Working Paper No. 146
ISSN: 0904-8154