The Comparative Analysis of the Selected Countries Economic Complexity in the National System of Innovation Framework

اقتصاد و توسعه منطقه ای

Article 4, Volume 25, Issue 15, April 2018, Pages 87-123   

Document Type: مقالات پژوهشی

DOI: 10.22067/erd.v25i16.73197

Authors

Mohammad Mahdi Ahmadian Divkoti^* ; HasanAli Aghajani; Meysam Shirkhodaei; Amir Mansour Tehranchian

Mazandaran University

Abstract

Extended abstract
1- Introduction
As stated by theoreticians, no factor can replace knowledge in the present-day economy; so that other production factors (such as labor and capital), which have been among the main contributing factors of development for decades, are also affected by such phenomenon. Accordingly, in the age of knowledge-based economics, many countries are seeking to develop their wealth creation through knowledge; thus, they seek to organize a mechanism in which knowledge is created based on the needs of society, which helps them pass through the path to maturity and evolution, and ultimately leads them to the wealth creation (Hasani, Rafiei & Bakhshiani, 2016).To measure the level of knowledge used in a country’s products, there are several indicators one of which is the economic complexity index (Pazham & Salimifar, 2016) proposed by Hidalgo and Hausmann (2009); to measure the complexity of the countries’ economy (Hidalgo & Hausmann, 2009). The economic complexity approach can be used as a benchmark for assessing the effectiveness of the countries’ national innovation systems. Many models have been introduced to assess and measure the success of innovation systems, but a more complex and more realistic approach to this measure can be demonstrated in the international arena. Thus, in this article; we first provided a very brief reference to the national innovation systems of the selected countries (including Japan, South Korea, Singapore, Malaysia, and Iran), then by introducing how to calculate economic complexity, opportunity gain and distance, we compared the comparative position of these countries while encountering economic complexity.
2- Theoretical Framework
Complex economies are economies bringing together a large amount of related knowledge in the form of large networks of people and produce a diverse range of knowledge-based products. In contrast, simple economies have a poor sponsorship and support of productive knowledge and produce less and simpler goods that require a smaller network of interactions (Hidalgo & Hausmann, 2009). For this reason, the design of the national innovation system is very important in order to provide an appropriate climate in which economic agents can innovate and create technology (Weng et al., 2012). Countries that have managed to bring together components in a product have accelerated the growth of innovation and, the economic growth, consequently whereas countries with a disparate national innovation system have failed to achieve such growth (Nasiriaghdam, Dehghan Tarzjani, Rezaei & Beik Mohamadlo, 2011). As a result, the national innovation system is a necessary, effective, and dynamic factor for the development of countries (Iqbal, Khan, Bashir, & Senin, 2015).
3- Methodology
To conduct the study, the data collection was done in two stages. In the first stage, using the documentary method and the search of relevant internal and external sources, books, scientific and research publications, theoretical foundations related to the innovation system of the selected countries were studied. In the next step, since one of the indicators of the success of innovation systems is the use of knowledge and innovation in the knowledge-based products production and export, the economic complexity index is used to compare the efficiency of these systems in the global arena. If we accept that the construction of a commodity requires a specific type and composition of applied knowledge, it is obvious that a country can produce a product which has access to this applied knowledge. From this simple principle, two useful tips for constructing the economic complexity index can be derived:
1- Countries with more applied knowledge will be able to produce a more diverse range of goods. In other words, the amount of applied knowledge accumulated in a country is expressed on the basis of the "diversity" of its products, or the number of distinctive goods it produces.
2- The production of goods that require a large amount of knowledge is possible only in a limited number of countries, in fact, the countries that have all the necessary applied knowledge. (Cheshomi & Malekalsadati, 2014).
In addition to calculating the economic complexity of countries, this approach can be used to calculate opportunities for countries to diversify exports, and the distance or ability to enter a specific product; these data and information about different countries in terms of economic complexity are accessible to everyone at Harvard Business Complex Atlas Site (visit http://atlas.cid.harvard.edu). Data on the economic complexity of selected countries in this research have also been extracted from this site.
 
4- Findings
Examining some of the indicators of the national system of innovation model in selected countries, such as the cooperation of industrial enterprises, the interaction of industry and university as well as; technology distribution and staff turnover, shows that selected countries other than Iran have taken effective measures to strengthen their national innovation system. According to the research findings, if we look at the situation of the "product space" of the selected countries over the past decades, we will notice a very delicate point, which is a significant shift taken place in the export situation of these countries over time; and have changed from export of products with low complexity (agricultural products, minerals, raw materials, etc.) towards highly complex products (single, industrial products); however, the product space for Iran was not so. In addition, by observing the export status of these selected countries from 2000 to 2016, it was observed that; over the years; the largest share of exports has been made in Japan, Korea, Singapore and Malaysia for the products belonging to the group of machinery, electronics and chemicals which are the most complicated. However for Iran; the opposite is true, and crude oil has the largest share in Iran's export, which, has a very low value in terms of complexity. On the other hand, Iran, has a higher possibility than the other countries in terms of obtaining the opportunity, while these opportunities are far away from the country’ reach, that is, the country's capabilities to achieve these opportunities must be strengthened. Concerning the points of interest for the selected countries, it is true that they have a lower rating in terms of opportunity, but these opportunities are closer to them. The next point is that for the selected countries, the high-tech products are closer in terms of distance; and because of the lack of adequate natural resources; or the implementation of rigorous policies in exploiting these resources, the raw materials, mineral resources and agriculture are far away. For Iran, the situation is a little different; raw materials, minerals, and crude oil, are closer for exploitation, and high-tech products are far from Iran in terms of distance although being less attractive for the benefit of the opportunity.
5- Conclusion
Economic complexity requires the policy makers to change attitudes in various fields, and the creation of synergy and coordination among all policies, so as to distance themselves from simple and linear causal relationships. They should also emphasize the promotion of the technological and innovative capabilities needed to sustain the country's sustainable development. This implies the need for a duplicate effort in the transition from a resource-based economy to a knowledge-based economy. It also requires the integration of the innovation policy into the package of the country's development policy, which should be pursued seriously by the central institutions in the public and private sectors. Changing the key variables of the economy is not achieved simply by changing price or encouraging the tax or establishing a law or establishing an organization or institution. It also requires special attention to the national system of innovation and the creation of coordination and synergy among all actors and institutions involved in this system. Of course, to accelerate the realization of economic complexity, the policies and experiences of the leading countries in the field of the national system of dynamic innovation can be used while taking into account the position, capacity, and potential of the country.

Keywords

National System of Innovation; Knowledge Based Economy; Economic Complexity

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