Mr. Prahalathan Iyer, Chief General Manager, Export-Import Bank of India

Emergence of BRICS in the World:

The basic precept under which the BRICS has been forged as a formal association is to become a more constructive and progressive group in the developing world. BRICS grouping is important for its members in terms of their portrayal of creating for themselves an important role on the global stage. This is underlined by the members sharing a different but common perspective on the global economic order, and a desire to wield greater influence over the rules governing international business and trade.

The BRICS as a whole is well-endowed with a portfolio of wealth – huge agrarian economies, enormous natural resources, a burgeoning services sector, significant human resources,and an ambitious manufacturing sector (which is already serving as the manufacturing hub for the entire world). All these factors provide ample incentives for the BRICS economies to collaborate together and enhance trade among themselves, and also with the rest of the world.The biggest factor that propels BRICS to become a force to reckon with is the huge market space that it offers to the entire world – these countries together account for 43 per cent of the world’s population. Further, BRICS constitute around 18 per cent of world GDP and more than 40 per cent of its currency reserves, estimated at around USD 4.5 trillion.

Areas of Cooperation Among BRICS:

Various rounds of discussions have already taken place, and the institutions from the BRICS nations have already forged important agreements for cooperation in multiple areas, such as infrastructure development, healthcare cooperation, agriculture development, trade and business enhancement, sports, maritime, science and technology, governance, domestic institutions, social programs, etc.

Under the BRICS Interbank Cooperation Mechanism alone, in which Exim Bank of India is a nominated member development bank, several areas have been identified for cooperation, such as local currency financing, infrastructure development in Africa, LC confirmation facility, cooperation in innovation, personnel exchange and skill development, framework of cooperation with the New Development Bank, sharing of credit ratings, among others.

BRICS – Case for Cooperation in R&D:

Several innovation studies take Research and Development (R&D) activities as a starting point for the analysis of innovative activities across the firms. Globalization of R&D has been accelerating since the last few decades through a combination of forces. These include: growth in R&D in emerging economies; off-shoring and outsourcing of R&D to developing regions by developed countries; improved level of collaboration between R&D institutions and end-users of R&D; and growing commercialization of R&D. In the commercial sector,innovation capabilities tend to follow the wealth created by manufacturing, catalyzed by accelerating product development cycles and some times by regulation.

A country’s focus on R&D can be broadly gauged through a set of parameters like R&D expenditure as a percent of GDP, number of researchers(per million people), scientific and technical journals / articles published,and share of high-technology exports as a per cent in manufactured exports. BRICS countries together hold significant share in the world in most of these parameters.

Global R&D Rankings: As per the ranking of Global Innovation Index (jointly compiled by Cornell SC Johnson College of Business, INSEAD, and WIPO), in the year 2018, China breached into be among the top 20 rankings, up from the 22nd position it held in 2017. India moved up to 57th position, from the previous rank of 60 in 2017. Brazil improved 5 notches and reached a rank of 64, as compared to the previous year’s rank of 69. Both Russia (from 45 to 46) and South Africa (from 57 to 58) dipped one notch down in the year 2018, from the previous year’s ranking.

Personnel Engaged in R&D: One of the critical components of R&D orientation in an economy is the number of personnel engaged in R&D in the country. According to the World Bank data, the number of researchers working in R&D areas within BRICS nations showed diverse trends. While Russia topped the list with over 3100 researchers, China stood at the second place with 1200 researchers per million population (only Russia, among BRICS nations has exceeded the world average of 1300 researchers per million). The number of researchers per million in Brazil was 700, the same was just 450 for South Africa, and about 250 for India.

Hi-Tech manufacturing: High-tech manufacturing and exports are critical indicators of technological development of nations. BRICS countries, though not leading players in high-tech exports, are increasingly emerging with greater share of hi-tech exports in the world. As on the year 2016, high-tech exports in total manufactured exports amounted to 13.4% in Brazil, 25.2% in China, 7.1% in India, 10.7% in Russia, and 5.3% in South Africa. Though the shares of high-tech exports of BRICS nations (other than China) in the total manufactured exports is lower than the world average (17.9%), in absolute terms, BRICS nations exported USD 527 billion worth of high-tech goods – a share of 25% in the world’s high-tech exports.

Trademark Applications: One of the important indicators of innovation orientation is Trademark applications filed by the residents of BRICS nations in the world. The number of applications submitted by BRICS nations for trademark registrations has also been increasing over the years. In the year 2003, BRICS nations submitted 6.4 lakh applications for trademark registrations, which increased to 26.7 lakh applications in the year 2016. The share of BRICS nations in the world in submission of trademark applications has also nearly doubled during this period – from 21% in 2003 to 40% in 2016. As regards actual trademark registrations, BRICS nations received 3.3 lakh registrations in 2003, which increased to 16.7 lakh in 2016; the share of BRICS in the world has also increased from 20% in 2003 to 34% in 2016.

Design Applications: The number of design applications (both direct and through The Hague system) submitted by the BRICS nations have also increased over the years – from around 1 lakh applications in 2003 to 7 lakh applications in 2016. As a result, the share of BRICS nations in the world has increased from about 25% in 2003 to 41% in 2016. The share of BRICS nations in the number of design registrations has also increased during this period – from 31% in 2003 to about 36% in 2016. In absolute numbers, BRICS nations received nearly 5 lakh design registrations in the year 2016, as compared to nearly 80,000 design registrations received in 2003.

Patents Filed: An analysis of total patent applications (direct and PCT national phase entries) by BRICS nations shows that there has been an increase in the number of applications by the BRICS nations during the period 2003-2016. The volume of applications by BRICS nations has increased from around 96,000 in 2003 to 13.24 lakhs in 2016. As a result, the share of BRICS nations in the world (in total patent applications) has increased from around 7% in 2003 to over 41% in 2016. The number of patents granted to BRICS nations (for applications submitted directly and under PCT national phase entries) have increased nearly 10 times during the period 2003-2016 – from about 36,000 approvals in 2003 to 3.55 lakh approvals in 2016. As a result, the share of BRICS nations in total patent approvals of the world have quadrupled – from 6% in 2003 to 25% in 2016.

The technology areas under which the patent applications are submitted by the BRICS nations are well diversified. The top sectors include: computer technology (6.8%), electrical machinery (6.6%), measurement science (5.9%), digital communication (4.9%), food chemistry (4.7%) special machines (4.6%), machine tools 4.5%) etc. The sector-wise analysis of patents granted to BRICS nations show that the top technology areas include measurement science (7.0%), followed by electrical machinery (6.8%), computer technology (6.2%), machine tools (5.4%), civil engineering (5.3%), materials and metallurgy (5.2%), etc.

Under the category of patents filed Abroad, BRICS nations have filed large number of applications with the United States Patent & Trademark Office. While individually too, most of the BRICS nations have filed patent applications largely with US Patent Office, the Russian Federation is an exception, which filed patent applications primarily with the European Patent Office.

Articles Published in Scientific Journals: Another important indicator showing the strengths of technology development of a country is the number of articles published in scientific and technical journals. During a decade period (2006-2016), BRICS nations have more than doubled the number of articles published in scientific and technical journals – from 291,000 articles in 2006 to 661,000 articles in 2016. Thus, the share of BRICS nations in the world in terms of publishing the number of scientific and technical articles increased from 19% in 2006 to 29% in 2016.

Strengthening the R&D Cooperation among BRICS Nations:

To surmise, BRICS nations are reckoned as R&D powerhouses with their reasonably high-ranking in the Global Innovation Index, and its high share in the world in several parameters measuring technological competency. To cite a few examples: in the year 2016, BRICS cumulatively accounted for one-fourth of world’s hi-tech exports; 40% of trade mark applications submitted in the world (34% of trademark registrations); 41% of design applications submitted in the world (36% of design registrations); 41% of patents filed in the world (25% of patents granted); and 29% share in the world with regard to articles published in scientific and technology journals. Strengthening R&D cooperation among BRICS nations would further improvise the technological competency of the member nations.

Under the cooperation area of Science and Technology, in the last meeting held at Hangzhou, in 2017, the Ministers from BRICS nations formulated the BRICS Action Plan for Innovation Cooperation,aimed at strengthening the BRICS cooperation in the areas of Science and Technology and Innovation through: furthering the public-private partnership; strengthening technology transfer and transformation;synergizing industry-academia-research; advancing youth innovation and entrepreneurship partnership;enhancing cross-border investment in Science and Technology and Innovation; and supporting young scientists and young entrepreneurs to share the best practices in innovation and entrepreneurship; among others.

Under the BRICS Interbank Cooperation Mechanism, the member banks have signed a Multilateral Cooperation Agreement on Innovation, during the BRICS Summit, held in the year 2014. The key objectives of this Agreement include promoting knowledge sharing initiatives related to best practices, innovative financing, emerging technologies and financing of innovation projects; exchanging views, experience and expertise on financing innovation; co-financing initiatives aimed at the technological development of areas of mutual interest, among others.Following the signing of this Agreement, in the year 2015, the BRICS member development banks established a Working Group on Innovation Financing.

While these steps are in the right direction, there is a need for furthering the R&D cooperation among BRICS nations to consolidate the position of the BRICS Bloc as an “Innovative Bloc” of the world.

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