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ESTION 1.a) Describe what is the difference between innovation and invention. (6 points). 1.b) Describe the different types of innovation usually identified by economic and business studies. (7 points). 1.c) Innovation has been frequently described in formal mathematical models as a linear process. Do you agree with this view? Articulate your answer by considering the major properties of the innovation process as discussed during the ECON1165 module. (12 points). QUESTION 2 2.a) Provide a definition of 'technological capability' and 'social capability' and describe the differences between them (5 points). Why can we say that innovation has a 'systemic' nature? (3 points). 2.b) Financial development, social capital, favourable business regulation, trade openness are different aspects of 'social capability' influencing innovation processes and, therefore, economic development. Make a ranking of these factors according to their observed degree of importance for economic development (3 points). Explain why 'inclusiveness' and 'equality in opportunities' can strengthen the innovation capability of an economy (5 points). 1 2.c) Figure 1 below shows the cross-country correlation between the development of the education system and the level of economic development. Analyse Figure 1 by arguing about the importance of the education system for economic development in low, emerging, and developed countries (9 points).
2.c) Figure 1 below shows the cross-country correlation between the development of the education system and the level of economic development. Analyse Figure 1 by arguing about the importance of the education system for economic development in low, emerging, and developed countries (9 points). FIGURE 1: GDP per capita 35000 30000 25000 20000 15000 - 10000 5000 0 -3.0 Education system Literacy 0.78 Primary teacher/pupil 1.75 Secondary enrolment Tertiary enrolment 0.88 0.88 % of total variance 57,7 Morocco India Zimbabwe Nigeri Z AKenya -2.5 -2.0 -1.5 Pakistan Tanzania United States Ireland. R²-0.69 Switzerland Austria Netherlands Denmark Belgium, United Kingdom Canada France Japan Germany Italy Singapore Spain Israel Taiwan Greece Portugal. Czech Rep. Korea Bra Slovak Argepha Eston Croatial Saudi Arabia. South Africa, Malaysia Clue Uruguay Russia Mexico Iran Turkey Algeria China ●Bulgaria " Jordan Armenia Norway ●Belarus Ukraine Indonesia Georgia Vietnam Moldova Kyrgyzstan Hungary Poland Lithuania Latvia Australia Finland Sweden New Zealand Slovenia -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 Education system Europe * North & South America Asia & Oceania Figure 4.2 GDP per capita and education system over 2000-2004 Africa QUESTION 3 3.a) What are Multinational Companies (MNCs) and why it is said that they hold 'best practices' and 'state of the art' technological and organisational knowledge? (5 points). 3.b) Let's assume that you are the manager of a local company in your own country aiming at supplying goods and services to MNCs. What strategies would you introduce in order to maximise the benefits of partnering with MNC subsidiaries? Please explain fully. (7 points) 3.c) In a second scenario, assume you are the manager of a domestic rival company aiming at competing with MNCs. What processes and steps would you take to compete and remain in the market? (6 points). 3.d) In a third scenario, you are a policy advisor of the national government in your country. What actions and policies would you implement in order to create a facilitating environment for MNCs and to increase the potential to gain technological knowledge? Why?
QUESTION 4 4.a) Global Value Chains (GVC) are managed by different types of governance. Explain how the market-based governance operates and what the underlying learning mechanisms are. (5 points) 4.b) How does the modular governance type work? Why might this type of governance be superior to the market-based one? (5 points) 4.c) Argue in what circumstances the relational governance might be more suitable than other types of governance. (5 points) 4.d) What are the pre-conditions for a captive type of governance to emerge? How does technological knowledge transfer occur in this case? (5 points) 4.e.) Analyse and explain the learning mechanisms put in place by GVC Vertical Integration under the hierarchy governance type. (5 points)