National innovation systems and globalization

The term innovation system has become widely used by scholars from different disciplines and by policy makers from all parts of the world. This chapter presents the national innovation system as a ‘new combination’ that has evolved and been reinvented by connecting it to new fields of theory and empirical research by scholars operating in disparate fields of enquiry. We start by referring to the very first contributions that made use of the concept – Freeman (1982) who emphasized the link between innovation and international trade and Lundvall (1985) who emphasized network formation and interactive learning at the national level. We use these quite disparate, but complementary, contributions to discuss some of the future paths of evolution of the concept. At the end of the chapter we relate the two original contributions to the literature on global value chains and we argue that combining the understanding of interactive learning and national innovation systems with the global value chain perspective is one way to reestablish the critical potential of the original ideas that became diluted in connection with the wide diffusion of the concept. We also argue that combining the innovation system and the value chain perspective is useful when it comes to developing a more satisfactory understanding of how countries can evade the poverty trap and the middle-income trap.