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The balance of externalities and internal effects in national innovation systems
The paper analyzes the balance of internal and external effects of actors' activities in national innovation systems. The actors implementing the internal effects minimize costs and receive benefits. If there are side effects (externalities), the other actors who had not participated directly in the internal effects implementation can obtain advantages and profits without bearing any costs. Externalities affect actors' motivations and encourage them to perform (or failure) some functions of the national innovation system (NIS). In order to achieve a rational combination of conflicting functions, it is necessary to reach certain proportions between the effects of actors' activities and the emerging externalities of these activities. The externalities and their impact on NIS processes are considered from the standpoint of a country passing a particular stage of technological development. The effectiveness of NIS actors' operations in the processes of knowledge transfer strongly depends on integration of national markets into global ones. The key mechanism of such integration is international competition. The positive externalities of international competition can create motivation for domestic actors of the NIS to innovate. However, if the competition is too intensive, it may lead to irreversible consequences for the domestic industries. At the same time, classic protectionism and high barriers to entry for foreign companies into domestic markets preserves the backward technological structure and thus serves as the main obstacles to economic development. The models of technology diffusion are considered to determine the possible ways of balancing positive and negative externalities of international competition on the investment stage of country's development. Much of the attention of the study focuses on such an externality as a technological spillover. On the investment stage, excessive suppression of technological spillover restricts entries of new domestic participants into markets and reduces their ability to further development of new products or production methods. The paper take into account the problem of choosing a degree of regulation of technological spillover and finding a balance between strict and lax protection of intellectual property rights. The examples of solving this problem for some countries are given. Finally, externalities of the bias in favour of a particular type of innovations are considered. These are the expansion of busyness research capacity and active business partnership and cooperation with external sources of R&D. So as to remove unfavorable structural changes caused by these externalities, there is a need to achieve some balance between positive and negative their influences.
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