Regional innovation systems in Asian countries: A new way of exploiting the benefits of transnational corporations

Abstract

SummaryThis paper argues for the importance of using the regional innovation systems (RIS) approach as both an analytical framework and a policy tool for generating economic development in developing countries. The paper reconceptualizes the RIS model to developing countries. RIS is normally based on endogenous growth models; however, in this paper we extend it to external capital, transnational knowledge sources and transnational corporations (TNCs). In particular we stress in this paper:(a) the importance of developing firm and regional absorptive capacity;(b) the importance of embedding TNCs in the region; and(c) regional policies for attaining these goals.These factors, we argue, are important for achieving sustainable economic development, building on exogenous sources of capital and knowledge. Finally, we illustrate the relevance of RIS for analyzing as well as formulating regional development policies by referring to two of Asia’s most significant cases: the regional innovation systems of Shanghai (China) and Bangalore (India).