Innovation in BRIC*

*(Brazil-Russia-India-China)
Stage de Recherche
April June 2011

Achal AGRAWAL X2008 Tuteur : M. Phillippe Cadre

Contents
Why Innovation in BRIC?..........................................................................................................3 Sources of Data...3 Sector Analysis of BRIC Countries4 Science vs. Technology.10 Industry Academic Co-ordination..12 Whos Patenting Where....14 Resident Patents........20 Research Expenditure...22 Reverse Brain Drain/ Brain Gain..24 Conclusions...26 Scope for Further Research...26 References.27 Acknowledgements...28

Why Innovation in BRIC?

If you know others and know yourself, you will not be imperilled in a hundred battles; if you do not know others but know yourself, you win one and lose one; if you do not know others and do not know yourself, you will be imperilled in every single battle Sun Tzu, The art of War According to a Goldman Sachs report [1], BRIC countries are set to become leading powers by 2050 with China becoming the leading world economy. The road to economic success has traditionally been innovation. If one looks at the most prosperous nations of today (U.S.A., Europe, Japan) one can see that these are also the leading countries in terms of innovation and this is not a coincidence. All economies are moving towards being knowledge economies. In such a scenario, for the developed economies to compete well and guarantee their advantage over the big emerging nations, it is imperative that they pay more attention to these countries and the sector to monitor the most is clearly innovation. In China for example, the number of patents filed has been increasing at a tremendous rate and by 2012 they plan to become the largest filer of patents in the world surpassing USA. While this may just be a strategy and not an indication of real innovation, it does indicate that the developing countries have realised the importance of strategic policies in the domain of innovation and are trying to use it to their maximum advantage. In addition to this, there have not been many studies on innovation in the developing nations as they have always been considered as manufacturing oriented and not innovators. There are also not many cross-country analyses in this domain as every nation has a different set of patent laws which usually renders a cross-country analysis tough. This is why I chose to do my project on innovation in BRIC with the intention of using my knowledge gained at INPI about patent laws and statistics and their use for useful economy analysis.

Sources of data
Some of the data for the statistical analysis were obtained from the database of World Intellectual Property Organisation (WIPO) which is a world body which coordinates patent laws and standards and also maintains databases using the official statistics provided by the member countries. While this data has the drawback of not being very up to date, most data being available only till 2008, it is nevertheless a good source as in any case, a patent needs 18 months to be published (not to be confused with granted) and hence at the time of the project, September 2009 was the latest data one could have had. WIPO statistics are open for all and hence do not involve any copyright infringement A possibility for a source of statistics was using the software EPOQUE used by the examiners at INPI for precedence research but such an approach would have been time consuming and the results would not have been much better. Hence I decided against it. Another source for patent statistics was the US Patents and Trademarks Office (USPTO). This was used mostly as a standard more than the credibility of the statistics, since for doing a cross country analysis, a standard is necessary for comparison and USPTO provides a

reasonable standard and is used commonly in the academic literature of the domain for reasons explained later on.

Sector Analysis of BRIC countries

To identify the sectors specifically targeted by the BRIC countries for technological development, a sector by sector analysis of the patent data was done for 30 leading countries and pooled data for all the remaining countries. The idea is to see if a country has a greater proportion of patent applications in certain domains than the world average, in which case we can conclude that the country is more active in that field, proportionally speaking, than others. Methodology - The raw data was obtained from the site of WIPO and it contained the average number of patent applications sector wise and country wise from 2003-2007. The ratio of patent applications in a particular field to total number of patent applications was then calculated for each sector for all countries. Then, for each sector, the average of the ratio was taken over all the countries, giving us a world average of ratios for all sectors. Subtracting this world average from individual ratio distribution, the difference between the ratios of a country with respect to the world average was found for the BRIC countries. It can be argued that this is a good method for cross country sector analysis as it negates the volumes involved which can be varying a lot. Although such analysis doesnt bring out the volumes, which is important nonetheless to determine the position of the countries in the world hierarchy, it does indicate which sectors the countries are targeting or are not active in.

Electrical Engineering
0,04 0,03 0,02 0,01 0 1 -0,01 -0,02 -0,03 -0,04 2 3 4 5 6 7 8

Brazil China India Russia

1 - Electrical machinery, apparatus, energy 2 - Audio-visual technology 3 Telecommunications 4 - Digital communication

5 - Basic communication processes 6 - Computer technology 7 - IT methods for management 8 - Semiconductors

Brazil It can be seen that Brazil is concentrating less in almost all sub-sectors of electrical Engineering and is especially bad at computer technology. China It is the clear leader among BRIC countries in this sector with pretty high emphasis on Telecommunications and Digital Communication. This can be attributed to the fact that telecommunication companies like Huawei and digital communication companies like ZTE have been patenting prodigiously in the recent past. India India is less than average in most sub sectors except computer technology. This is not at all surprising as Inida has long been heralded as an IT giant and has been very much a part of the IT boom. IT industry has developed at a very rapid pace in the recent past and India is set to become even more able in this partivular sub sector. What is surprising is that while it is good at High tech domains like computer technology it is less than average in other sub sectors. Russia Russia has a very similar distribution to Brazil. Whether this is an indication of Brazil and Russia having a similar focus or just a coincidence would only be clear after looking at other domains.

Chemistry
0,06 0,05 0,04 0,03 0,02 0,01 0 -0,01 -0,02 -0,03 -0,04 1 2 3 4 5 6 7 8 9 10 11 Brazil China India Russia

India is excluded in Organic fine Chemistry (.20) and Pharmaceuticals (.19) to better see other effects which would have not been noticeable otherwise
1 - Organic fine chemistry 2 Biotechnology 3 Pharmaceuticals 4 - Macromolecular chemistry, polymers 5 - Food chemistry 6 - Basic materials chemistry 7 - Materials, metallurgy 8 - Surface technology, coating 9 - Micro-structural and nano-technology 10 - Chemical engineering 11 - Environmental technology

Brazil Brazil is concentrating less on pharmaceutical innovation. This is not to say that its pharmaceutical industry isnt an important part of the economy. Au contraire, it is one of the biggest and most vibrant industries in Brazil. Its just that they are not innovating as much and are content with selling generic drugs to third worlds countries in Africa. Brazil along with Canada and India have been vociferous in their appeals against the TRIPS agreement passed in 2005 which harmonised the patent laws and especially affected the pharmaceutical industry. China China is average at most, but is slightly more active in chemical fields India India is clearly concentrating much more in this sector compared to other BRIC nations and also the rest of the world, especially in Organic fine chemistry, Biotechnology, and Pharmaceuticals. This has been due to the recent boom in research and development in the pharmaceutical and Biotechnology sector with lots of foreign investment as well as local research. Russia Strong in Food Chemistry and Materials, Metallurgy 6

Mechanical Engineering
0,04 0,03 0,02 0,01 0 1 -0,01 -0,02 -0,03 -0,04 2 3 4 5 6 7 8

Brazil China India Russia

1 Handling 2 - Machine tools 3 - Engines, pumps, turbines 4 - Textile and paper machines

5 - Other special machines 6 - Thermal processes and apparatus 7 - Mechanical elements 8 - Transport

Brazil Brazil is clearly the strongest player in the sector especially in the domain of Transport and other Special machines. This is due to the fact that companies like Alstom and Embrauer (small sized jets) have been doing research and development at a fast pace in brazil. China China is concentrating less than averagely on this sector especially in handling and transport India India is clearly the worst among BRIC especially in the sectors Brazil has a niche in. Russia Russia has a greater percentage than average patents on machine tools and other special machines. Again we see in this sector that Brazil and Russia have similar patterns. In this sector, this could perhaps be linked to oil production as both the countries are major oil producers and hence perhaps they have developed an expertise in this sector as oil drilling requires sophisticated technology in mechanical engineering.

Instrumentation
0,04 0,03 0,02 0,01 0 Optics -0,01 -0,02 -0,03 -0,04 Measurement Analysis of biological materials Control Medical technology

Brazil China India Russia

This is a sector which requires very high level of expertise and is not the easiest sector for the developing countries to target. The above graph clearly supports this as except for Russia, which has traditionally been one of the leaders in this field (Soviet Union Days) the other 3 countries are all below even the world average. Brazil Not surprisingly, Brazil is just about average in this sector China China has not made big progress in this sector which is a bit of a surprise. It is lacking especially in Medical Technology. India It is the worst among BRIC nations being especially bad at medical technology and measurement. It is surprising as India had very good relations with Russia and they still did not insist on any technology transfer. Russia Its clearly the best among BRIC, especially in measurement and medical technology. Not surprising as Russia was and is one of the world leaders in Military equipments which require high-technology instrumentation.

Other Fields
0,04 0,03 0,02 0,01 0 -0,01 -0,02 -0,03 -0,04 -0,05 -0,06 Furniture, games Other consumer goods Civil engineering Brazil China India Russia

This sector is not the biggest market nor is it the most lucrative one. But one can see that the countries good at mechanical engineering are also good at civil engineering. Namely Brazil and Russia. Brazil seems to be developing a niche in this sector. It isnt surprising that India was the worst in Mechanical engineering and is the worst at Civil engineering too. One can deduce a correlation from this. Brazil Its good at Furniture, games, and other consumer goods China Average at everything India Its especially bad at civil engineering Russia Average Source for raw data for Sector Analysis - Patent applications by field of technology (20032007 average) by leading countries, WIPO - http://www.wipo.int/ipstats/en/statistics/patents/

Science vs. Technology

9

According to the linear model of innovation, fundamental scientific research entails technological research which in the end manifests itself in terms of patents. Although this was a widely accepted model till the 90s, one of the major problems for the developing countries (especially BRIC) has been the lack of conversion of scientific research into patents. A good way to see this is by simply plotting the country rank for the number of scientific publications against the rank for number of patents coming from the country. Since the patent statistics can vary widely depending on the laws of the countries and the procedure of granting patents, only the patents filed in US and originating from various countries were studied. This harmonises the data, and hence lends comparison possible. This is a common method for measuring innovation level for all countries in academic literature (Daniele Archibugi (1992), Scherer and Weisburst(1995)). Since USA is clearly first in both the rankings, no information was lost in doing so, although China would soon be crossing USA in both, number of patent applications and number of scientific publications in the near future. Methodology For Scientific publications, I used SCImago Journal & country rank* which has a database of over 8000 Journals in various domains of science. This database ranks all the countries by the number of scientific publications, years (1996-2009) and scientific fields. Hence this ranking was easily obtainable without treating any raw data. For US Patent information, statistics published by USPTO** (USA patent office) were treated to rank the countries in blocks of 5 years. The number of patents was averaged for 1997-2001, 2002-2006, and 2007-2010 and the countries were ranked for each block. The ranks for the scientific publications were also averaged for the same time blocks for being consistent. *The SCImago Journal & Country Rank is a portal that includes the journals and country scientific indicators developed from the information contained in the Scopus database (Elsevier B.V.). These indicators can be used to assess and analyze scientific domains. SCImago. (2007). SJR SCImago Journal & Country Rank. Retrieved June 06, 2011, from http://www.scimagojr.com **USPTO site with US patent information by country of origin counted as the residence of the first named inventor in the patent application. http://www.uspto.gov/web/offices/ac/ido/oeip/taf/cst_utl.htm

10

Country Comparison of Science vs. Technology 1997 - 2010

35 30 25 20
India

Brazil Malaysia Russia

Chronology of the 3 points 1997 2001 2002 2006 2007 2010

US Patents Ranking

Singapore

15
China

(all data averaged over the years mentioned above)

10
France

5
South Korea

0 0

Germany

10

20

30

40

50

60

Scientific Publications Ranking

From the graph, we can see some countries and their ranking dynamics. Some interesting points to note are Most countries moving towards (1,1) are Asian countries. This may of course be an effect of the huge population and hence the huge potentials some of these countries contain. There are notable exceptions to this explanation though. Brazil and Russia in spite of having potential are not approaching (1,1). Singapore has been having a negative population growth rate and yet seems to be moving in the right direction. European countries like France are being replaced by the influx of bigger developing countries like China and South Korea Most curves have a positive slope except for Brazil and Russia. A positive slope is a logical deduction of the linear innovation model, which suggests a linear chain-like relation from fundamental scientific research to industrial exploitation of the technology resulting from the academic research. Brazil and Russia (and Singapore to a small extent) seem to be defying that logic. This could be due to many reasons. An obvious hypothesis would be that the academic research in those countries is not linked very well to the industry, which is why we see Brazil improving in publication rankings but still not gaining on patents ranking. Russia on the other hand is reducing in publications ranking while staying constant on the patent front. This could be explained if scientists are being incorporated into the industrial research recently, but they not had enough time to innovate and that sometime in the near future the trend might be reversed. We shall investigate all the hypotheses and try and find evidences whether these are the principal reasons behind the countries performances.

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This analysis could be refined by changing the criteria for patents granted in USA to patents granted in USA or Japan or EPO (European Patent Office) as this would reduce the geographical constraints some countries might have compared to others if just USA is taken into account but such an analysis would put the European countries and Japan out of the purview of this analysis. Hence such a method was not adopted.

Industry Academic co-ordination

From the previous analysis, we see that there are certain countries like China, India, Malaysia, South Korea where scientific progress is leading to technological progress while in some other countries like Brazil and Russia, it doesnt seem to be the case. In this section we shall investigate this observation in detail, in various domains with the help of an indicator which shall be defined to gauge the co-ordination. To create this indicator, a simple logic was used. If the industry and academia are coordinating their research well, the number of patents and the number of scientific articles published in a particular field should move in sync with each other. The problem with such an analysis was that patents are classified in a totally different way from scientific articles. Hence the major challenge lay in correlating the 2 different types of classifications. For the patents, I used IPC (International Patent classification). This classifies the patents on the basis of their uses and the major domains. For scientific articles I used the same source as used for the previous analysis, namely The SCImago Journal & Country Rank. This has classification based on scientific domains, but not uses. The logic of both the classifcations are different, and hence finding an exact correspondence is not very clear. After going through all the domains, I managed to single out a class in the patent classification which had an exact correspondence with a sub-domain in the scientific classification. The class is A61B6+ or A61N5/10 or A61B8+ or A61N7+. I searched for patents of this class in EPOQUE which is a software used by examiners of INPI for precedence search as it also provides searchable statistics for patents and has an enormous database of patents and their classifications. These classes corresponded to Ultrasound and Radiological technology in Health Professions in the scientific classification. Unfortunately, I could not find more such correspondences between the 2 classification to effectively use the indicator, and I propose it as further research. Also, for this class, there were not enough patent publications for India and Russia to derive any tangible trends or analysis from. Source : Epoque and SCImago Journal and Country Rank

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1995

2009

2004 (Bayh-Dole Act) Analysis : As one can see that in the case of China, the industry-academia co-ordination seems to be almost perfectly in sync whereas in the case of brazil it seems in sync initially but after having passed an act similar to the Bayh-Dole Act of the USA, they have started moving totally out of sync. Bayh-Dole act was an act which encouraged the universities to patent their findings, and it was first implemented in USA after which the universitites started filing lots of patents. It was passed so that the universities get impetus to start doing usable research as they could then make money out of their inventions. On the face of it, it is a very good act and exactly what countries like Brazil and Russia need as they have a very well reputed academia but the industrial research is not that well developed. This act however was also criticised by certain economists as they thought it encouraged universities to concentrate more on applied research and neglect fundamental research and also because they thought that patenting university inventions led to blocking of technology which could otherwise be used by the companies. Hence it is not very surprising that since Brazil passed its version of Bayh-Dole act in 2004, the number of patents and academic papers are totally out of phase. Also, the universities have started patenting a lot more than before and almost all important universities have setup Technology Transfer Offices (TTOs). 13

Whos patenting where?

In this section, we shall see the breakdown of the countries filing patents in the BRIC countries. For this analysis, data from the website of WIPO was used. The website contains statistics for Patent grants by office and country of origin from 1995-2009. Unfortunately, this data isnt complete for all countries, notably for Brazil and India which have quite a few years missing. For Brazil, I averaged the data for 3 out of the last 5 year data. For India, there was no data for last 5 years at all. Therefore, instead of patent grants, I acquired the data of patent applications by country from the annual report of Indian patent office. This is not a major problem for comparison as the percentage of applications and grants by country should not differ by much considering its the same procedure for all countries. In the following graphs, one can see the percentage of patents granted (applied for India) among the top few foreign countries.

Brazil

12%

9% France Germany 17% Italy Japan Netherlands Republic of Korea 4% Sweden Switzerland UK USA Others

37%

5% 4% 3% 5% 1% 3%

14

India

1% 5% 15% 11% 2% 9%

France Germany Italy Japan Netherlands Republic of Korea Sweden 6% Switzerland UK USA Others China

34% 6%

3% 4% 4%

We can see that the pie-chart for Brazil and India are pretty similar. The few differences being, Asian countries protect themselves more in India than in Brazil, which is not very surprising considering the geographical proximity. This reason explains the higher percentage of USA in Brazil too.
Russia

5% 18%

7% France 15% Germany Italy Japan Netherlands 4% 7% Republic of Korea Sweden Switzerland UK 4% USA Others Ukraine

22%

3%

6% 6% 3%

15

Russia has the most even distribution of foreign patents among BRIC. South Korea has a higher proportion in Russia because of geographical proximity again.

China

6%

3%

8% 1%

France Germany Italy Japan Netherlands

19%

2% 2% 2% 9% 3% 45%

Republic of Korea Sweden Switzerland UK USA Others

Chinas distribution is highly skewed due to Japan which has a whopping 45% of the whole share. Korea too is a big player in China. Again, this is due to geographical proximity. One glaring conclusion from the pie charts is that geographical proximity plays a big role in the applications for patents. This can be easily explained as protection is usually only sought for in regions where the industries plan to sell their product, and since some small companies cannot afford to trade and compete in a market located far away, they do not bother to protect themselves in such countries. To remove geographical considerations as a parameter, I divided the countries into various groups depending on their geographical location vis--vis the BRIC countries. For BRIC countries, the European countries are roughly equally far away, eliminating the geographical proximity as a parameter. Hence, for the major 7 countries of Europe, the percentage of patents of a country among the patents from all the 7 countries was calculated and tabulated to see if any country was specifically targeting or not targeting a country or the other. In an ideal scenario a country must have equal percentages for all the BRIC nations (given that all 4 are emerging markets and geographically roughly equidistant), but we see in the following graph that it is not so.

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40 35 30 25 20 15 10 5 0
s an y an d nc e er la nd en U K w itz er l G er m F ra w ed Ita ly

Brazil Russia India China

N e

th

Source for Raw Data : WIPO Statistics Database countrywise Germany has considerable lesser percentage of patents in India as compared to other BRIC nations. The reason for that is not very clear. France France has a higher percentage in Brazil. This can be attributed to the fact that Alstom among other compaines has big operations in Brazil. Netherlands Netherlands has a strong presence in India and China thanks to companies like Phillips who sought to protect their products in these nations. Switzerland it seems to be concentrating more in Russia and China. Sweden It has a higher concentration in India, and not in Russia. This is very strange as Sweden shares much more with Russia than India in terms of geographical proximity and climate. UK UK has sought more protection in India but thats not surprising considering the strong ties between the 2 nations. Italy Italy has a higher concentration in Brazil and Russia. This could be conjectured to be because of the mechanical engineering/ civil engineering sector, but for that one will have to analyse the classes of patents which have been filed.

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Japan vs South Korea

90 80 70 60 50 40 30 20 10 0 Japan South Korea Brazil Russia India China

Source for Raw Data : WIPO Statistics Database countrywise A similar analysis was done for the Asian group. We can see that South Korea clearly has more presence in Russia than in other BRIC countries. This is clearly due to the fact that South Korea is very close to Russia. Japan is very close to Russia too but South Korea has the benefit of having a land route to Russia. South Korea has also been actively pursuing increasing trade with Russia and therefore the extra protection sought by South Korea is not surprising at all. What might also be interesting to find out is how many of these patents are applied for in all the 4 BRIC countries and among the remaining ones, how many are by SMEs. A pattern might emerge with respect to geographical distance and percentage of patents by SMEs. This analysis however is outside the scope of this report as it is difficult to find out which companies are SMEs considering that most SMEs have sites only in local language and hence it is tough to classify.

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BRIC in other countries

70 60 % of BRIC Patents 50 40 30 20 10 0
N Eu ro pe Ca na da Si ng ap or e Ko re a Au st ra lia JA PA To ta l US A UK

Brazil China India Russia

Source for Raw Data : WIPO Statistics Database countrywise Analysis: From the above graph, quite a few observations arise. China, for example, has clearly more percentage of BRIC patents in Korea than in other countries. This isbecause Korea too has a higher percentage of its patents in China and companies use patents as a strategy for negotiations. Hence Chinese companies need to protect themselves more in korea if Korea is protecting itself in China. Similarly, Brazil and Russia have much higher percentages in Canada. India, on the other hand is concentrating more on Singapore and Australia. This is not too surprising either, as Australia and Singapore have a pretty big Indian immigrated population and hence there are many ties between these countries. One also notices that globally, China is an overwhelming leader among the BRIC countries, followed by India. Russia and Brazil and lagging behind as has been consistently the case in all the analysis of this report. Brazils higher percentage in Canada can be explained by the fact that Embraer (Brazils leading exporter) wants to protect itself against Bombardier (its main rival) which is Canadian. This would stop bombardier from using Embraers technology for production in Canada where most of its aircraft construction is based. It is also interesting to note the percentage of patents granted in the BRIC countries to residents and non residents.

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Resident Patents
Residents Patent granted
90,00 80,00 70,00 60,00 percentage 50,00 40,00 30,00 20,00 10,00 0,00 Brazil China India Russia 2009 2008 2007 2006 2005

Source for Raw Data : WIPO Statistics Database countrywise This graph is accurate for China, Brazil and Russia, but the Indian data has been approximated by number of patent applications. In this case, its not a good approximation as it has been noticed that the percentage of applications for residents is far superior to the percentage of grants. This is logical as foreign companies usually try and patent inventions which have already been patented abroad or are of better quality. Nonetheless, the trend should not be too misleading. This being the only data available in the annual reports of Indian IP office and WIPO IP statistics, I had to make do with this. Analysis: This graph is interesting for quite a few reasons. It gives a very good insight to the strategy and evolution of the 4 fastest developing economies of the world. The first obvious insight it gives us is that China is the only country among the 4 which is on a rise. This is not surprising as China has been very aggressive lately and has started various programs for locals to file more and more patents and has also started a process of reverse brain drain attracting the skilled Chinese Diaspora to come back to china and lead innovation projects. Russias percentage is clearly on decline but this is mainly due to the fact that more and more foreigners are filing patents in Russia. The number of residents getting patents has nevertheless risen from 19447 in 2005 to 26294 in 2009. Considering this, India and Brazil are facing the same situation, more and more locals are being granted patents but so are more and more foreign companies seeking protection. Another important and not so obvious conclusion that can be drawn from this graph is that of the countrys strategy. Why does Russia have 80% of its patents granted to locals? Why is Chinas percentage so high too, and why is China pushing so hard to get it further high? This

20

strategy could be guessed to be that of creating a Patent Thicket trying to block other countries from entering the market. This makes sense for Russia and China as local patents are written in local languages making it tough for companies wanting to enter the market to know if a similar technology has already been patented or not, and if yes, to take it to the court. A patent thicket as defined by Carl Shapiro is a dense web of overlapping intellectual property rights that a company must hack its way through in order to actually commercialize new technology. Although this might seem as a negative strategy detrimental to actual innovation, its a proven method for countries wanting to protect its market from foreign competition while encouraging innovation within its borders. A similar strategy was used by USA and Japan in the early 80s. This led to a lot of frivolous patenting in the USA and Japan. This could also simply be a result of other countries not protecting themselves in Russia or China, but this is not the case as there are around equal numbers of Non-Resident patents in India and Russia, but Russia just has far too many resident patents. India and Brazil however do not have a very high percentage of resident patents, but these 2 nations have been the most vocal internationally about having milder patent laws for the developing countries, especially in the pharmaceutical sector because without that, they claim that they would not be able to provide medicines to people who cannot afford the patented medicines. Another important statistic, which should show us the quality of local patenting, can be constructed as follows. We see the ratio of number of patents granted to residents in the country to the number of US patents granted to the residents of the same country. It can be seen that this is a good indicator of quality as an increasing ratio would imply that the amount of patenting locally is increasing without it increasing in USA which would most probably be the case if patent quality of the patents granted in the country is going down. This is of course assuming that the quality of US patents have remained same over the years in consideration. This assumption is valid in the sense that the US laws have not changed, but recently USA has been trying to improve their patent quality and this kind of analysis shall not be very valid with US patents henceforth. Evolution of Ratio of Local Patents granted to US Patents granted (Every country has a different y-axis scale) Source : USPTO and WIPO database
Brazil
25 60 50 40

China

20

Ratio of Local Patents to US Patents

15 30 10 20 10 0

India
14 12 200 10 8 6 4 50 2 0 0 150 250

Russia

100

2009

1995 21

Analysis : Although the graphs are not very conclusive or clear in trends, one can still draw global conclusions. For Brazil, because of the missing data, the trend is difficult to gauge but globally one can see that the ratio has gone down by half indicating an increase in quality. For China, the ratio has globally increased over the years, which implies a decrease in quality. This only supports the conclusion drawn from the previous graph that China is using patent thicket as a strategy. India is the only country which has a clear trend and the patent quality has clearly been improving. The missing data for the past few years though could hold a surprise as we see an upward trend from 2005 onwards, but if one goes by the graphs of China and Russia, its only a temporary rise. For Russia, the trends are not at all clear and hence no conclusion can be drawn for Russia from this analysis.

Research Expenditure
120000 Millions 1990 International Geary-Khamis dollars

100000

80000 China India 60000 Russia Brazil France Germany 40000 korea

20000

1995

2000

2006

Source: Research intensity data from OECD Factbook 2008, GDP data from the late economist Angus Madisson [4] Analysis: The above graph is pretty illustrative of the research spending in few of the important countries as it takes into account the purchasing power and inflation rendering a cross-country comparison over time possible. South Korea and China are the clear movers. What is also interesting to see is whether this increase in spending is due to the government spending more or because of the industrial research taking off. Even in research intensity (% 22

of GDP spent for research), both these countries have increased drastically (China from 0.57% in 1995 to 1.54% in 2006 and Korea from 2.37% to 3.33%). The other BRIC nations have seen a slow but steady increase in research spending, the increase being mostly due to the growth of GDP rather than due to increase in research intensity which has remained almost constant. This is the reason why we see India increasing at a slightly faster rate than Brazil and Russia. In Europe, one can see that Germany is clearly the leader and it is increasing the gap between it and France. This graph omits Japan and USA due to scaling. The following graph would illustrate the situation as it is currently.

Source: Battelle

From the above graph, one can see that there is a correlation between R&D spending and the number of Scientists and engineers per million of the population and that the correlation is more or less linear. Among the BRIC countries, Brazil, China and India are clustered together although as pointed out from the previous graph, China is moving up fast and pulling away from the other BRIC nations. Another important fact to be noticed is that Russia is among the countries that has a lot of scientists and engineers but does not spend enough of its GDP on R&D. This can be interpreted as waste of resources assuming the countries on the line are optimising their resources. Brazil, India and China though have to increase the number of scientists and engineers to make effective use of the money being spent on R&D. This is

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already being done as the number of students doing engineering and scientific studies in these countries has been increasing at a very high rate in these countries.

Reverse Brain Drain/ Brain Gain

One of the major factors for the sustenance of American and to some extent European dominance in the 80s and 90s was the influx of foreign students contributing to the research and development. In the recent past however, with the BRIC economies blooming and plent of opportunities on offer, more and more students are returning back to their countries after few years of stay. These students who have gained expertise in the developed economies go back and go on to lead innovative projects and research groups. While these are still early days for this trend, it is clear that this is going to play a major role in recent future in terms of knowledge transfer. In this section, we shall analyse where are the BRIC countries placed currently in terms of skilled manpower living abroad and what are the trends for the reverse brain drain and what the government policies to attract such talent back are. For such an analysis, we would look at the number of students from BRIC countries doing higher studies (Tertiary Level) in USA/Europe/Japan/Canada/Australia.
Foreign Students enrolled
300000

250000 Number of students

200000 China India Russia 100000

150000

50000

0 2009 2007 2005

Source: OECD stats for Russia (http://stats.oecd.org/Index.aspx?DataSetCode=RFOREIGN), and Project ATLAS of Institute of International Education (http://www.atlas.iienetwork.org/) for China and India. Stats for Brazil were not available but a similar trend has been indicated by various independent sources such as university sites and education fairs. Analysis: One can see that the number of international students in China, Brazil and India has been rising at a rapid pace too. While this might not be saying anything for the brain gain as the students coming to these countries might not be there for research or for studying science or engineering, but it does give an indication of the attractiveness of the universities for

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foreign students. One can see that China and Russia have considerably more number of foreign students as compared to India. For China and India, we also have the break-up for the origin of students, which is presented in the table below. China South Korea 32.62 % Iran Japan 10.65 % Nepal USA 7.52 % UAE Vietnam 4.65 % Ethiopia Source : http://www.wes.org/educators/pdf/StudentMobility.pdf India 11.2 % 9.9 % 9.7 % 5.7 %

As one can see from the table, the students coming to China are from countries whose education system is at par if not better than Chinas, whereas students coming to India are mostly from poorer countries in search of cheap and better education. One can conclude from this that China is placed well ahead of India in terms of attractiveness of its universities and thus has a possibility of brain gain in the near future as happened in United States earlier. Unfortunately, there is no country break-up for the data for Russia and the data for Brazil is not searchable. BRIC Students in foreign countries (Reverse Brain Drain) Place of Origin Undergraduat e Graduate Non Degree OPT Total

39,921 66,453 10,251 11,003 127,628 China 15,192 68,290 1,758 19,657 104,897 India 1,975 2,035 353 464 4,827 Russia 4,083 3,121 882 700 8,786 Brazil Source : Open Doors. http://www.iie.org/Research-and-Publications/OpenDoors/Data/International-Students/By-Academic-Level-and-Place-of-Origin/2009-10

From the above statistics, even if they are limited to USA, one can easily see that China and India are very well placed in terms of manpower if the students decided to return to their respective countries. The stay rates for students from China and India, was 70 and 77 percent respectively in 2001 among the doctorates. According to a survey by an economist, Vivek Wadhwa, the stay rates for Indian and Chinese people are going down considerably after a boom in the economic opportunities offered by both the nations. All this indicates that China and India would profit a lot from student mobility while Russia and Brazil will lag a bit behind in these respects.

Conclusions

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The report is intended as a broad overview of Innovation in BRIC countries and it is meant as just crude cross country analysis between these 4 countries. From the above analysis, one can see how these four countries are poised in the field of research and development and we also get a rough idea of the future scope for these countries. On that basis we can see that even though China is grouped in the BRIC, it is pulling way ahead of the other BRIC countries. India is trying to keep pace with China and in most sectors and analysis; India is always lagging behind China but still following it. We realise that the innovation systems of Brazil and Russia are vastly different from that of India and China who share certain similarities. China is eons ahead also because its policymakers have realised that the road to the top is innovation and they are aggressively pursuing every strategy possible to ensure the rapid development of innovation in the country. The dramatic rise of ZTE and Huawei are examples of such policies. What is unfortunate is the lack of harmonised data, and there is no way around this problem. One can get valuable insights about the industries from patent data but if not coupled with economic parameters, it is slightly underutilised.

Scope for further research

What would also be interesting to see is the comparison of other N-11 countries vis--vis the BRIC nations. Even in this report we have seen that countries like South Korea are having rapid development in the innovation sector too and should not be ignored. The correlation between the scientific literature classification and the patent classification, if done would be a great help for future studies trying to study the link between scientific publications and Patents. My guess is that it is only partially possible as there are fundamental differences in the way of classification of the two and it would be impossible to change it just to correlate the two. If not, there are other methods of closely studying the academic-industry relations like seeing the patents of each universities of the country and then following up to see if the patent was finally adopted as a finished product. This would help judge the valuability of the Bayh-Dole act which is still a hotly debated issue among the economists.

References

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1) Building Better Global Economic BRICs Jim o Neil, 30th November 2011. Goldman Sachs. http://www2.goldmansachs.com/ideas/brics/building-better-doc.pdf 2)Scherer, F.M. and Weisburst, S. (1995) Economic Effects of Strengthening Pharmaceutical Patent Protection in Italy. International Review of Industrial Property and Copyright Law 26:1009-24. 3) Carl Shapiro, Navigating the Patent Thicket: Cross Licenses, Patent Pools, and StandardSetting, 2001, Innovation Policy and the Economy (Vol. I) (Jaffe, Adam B. et al., eds), pp. 119150, MIT Press. 4) Business Week - http://wadhwa.com/2011/01/14/businessweek-china-could-game-the-u-sin-intellectual-property/ 5) http://ckan.net/package/econonomic-history-gdp-historical-estimates 6) Batelle 2011 Global R&D funding forecast. 7) Americas loss is worlds gain. March 2009. UC Berkeley. Vivek Wadhwa et al 8) http://www.wes.org/educators/pdf/StudentMobility.pdf 9) Do National Patent Laws Stimulate Domestic Innovation in a Global Patenting Environment? A Cross-Country Analysis of Pharmaceutical Patent Protection, 1978-2002. Yi Qian. Review of Econommics and Statistics, Vol. 89, No. 3, 2007 10) IPC - http://www.wipo.int/classifications/ipc/en/ 11) Open Doors International Student data for USA : http://www.iie.org/Research-andPublications/Open-Doors/Data/International-Students/By-Academic-Level-and-Place-ofOrigin/2009-10 12) USA Doctorate students http://www.nsf.gov/statistics/seind04/c2/c2s4.htm stay rates for 2001 :

Acknowledgements
I would like to thank INPI for hosting me for this internship and giving me considerable freedom in the choice of my subject matter and yet guiding me wherever I needed help. I would like to thank my tutor, Mr. Phillippe Cadre for his thoughtful guidance, Mme Martine Planche for her support, M. Yves Lapierre for proposing the internships to 27

polytechnique students, Late Mlle Audrey Lavigne for making me feel at home at INPI, M. Marc for his thoughtful comments and ideas for my project, and the rest of Direction des Brevets for providing a convivial environment to work in. I would also like to thank Ecole Polytechnique for allowing me to embark on this internship

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