Research Policy 41 (2012) 430–441 Contents lists available at SciVerse ScienceDirect Research Policy j our nal ho me p ag e: www.elsevier.com/locate/respol Explaining divergence in catching-up in pharma between India and Brazil using the NSI framework Samira Guennif a , Shyama V. Ramani b,∗ a CEPN, Université Paris 13, Paris, France b UNU-MERIT, Keizer Karelplein 19, 6211 TC Maastricht, The Netherlands a r t i c l e i n f o Article history: Received 1 April 2010 Received in revised form 19 July 2011 Accepted 13 September 2011 Available online 21 October 2011 Keywords: Pharmaceutical industry India Brazil Industrial capabilities Catch-up National system of innovation a b s t r a c t Since the mid-twentieth century, the national objective of India and Brazil has been to develop indus- trial capabilities in essential sectors such as pharmaceuticals. At the outset they shared some common features: a considerable period of lax intellectual property rights regimes, a large internal market and a reasonably strong cadre of scientists and engineers. However, over sixty years, India has had much more success in building indigenous capabilities in pharmaceuticals than Brazil, at least to date. Why? In exploring the answer to this question we show that in both countries the design of State policy played a crucial role and the endogenous responses in the national system of innovation consisted of two parts. On the one hand, most of the time, the predicted and desired outcome was partially realized and on the other hand, there were invariably, other unpredicted responses that emerged. The latter unexpected elements, which were specific to the two countries, pushed them along distinctive trajectories. © 2011 Elsevier B.V. All rights reserved. 1. Introduction Since the mid-twentieth century, developing industrial capa- bilities in essential sectors such as pharmaceuticals has been the national objective of India and Brazil. While at the end of WWII both countries differed enormously in their demographic structure and their socio-economic history, they also shared some common features: a large internal market, a reasonably strong cadre of sci- entists and engineers, and, over time, a similar evolution of policy regimes, namely a State policy of import substitution followed by a period of economic liberalization. However, at the begin- ning of the New Millennium, India had much stronger indigenous capabilities in pharmaceuticals than Brazil. How is it that after starting out with a comparable set of industrial capabilities and being subjected to similar development doctrines, their patterns of catching-up resulted in such different outcomes? What factors contributed to such divergent trajectories? These are the questions we will attempt to answer in this paper using the ‘national system of innovation’ (NSI) framework. The NSI approach was spearheaded by the seminal work of Lundvall (1992), Nelson (1993) and Freeman (1995). Emerging from an older stream of literature of the evolutionist school of economics ∗ Corresponding author. Tel.: +33 608803383; fax: +31 043 388 4499. E-mail addresses: samira@guennif.com (S. Guennif), ramani@merit.unu.edu (S.V. Ramani). on industrial ‘catching-up’ of late-comer countries, it was initially proposed as a possible alternative to the macroeconomic models of growth. These models postulate that if knowledge is codified and freely available, latecomer countries will grow faster than leader countries for the reason that the former will benefit from exist- ing technologies developed by the latter at a lower cost and at a more rapid pace and thereby the gap between the two would be reduced. However, this ‘convergence hypothesis’ has been invali- dated by decades of uneven economic growth and persistent gaps in income per capita between backward and advanced countries (Landes, 1998). 1 The ‘catch-up’ literature has explored the reasons for such divergence through case studies of the historical evolu- tion of countries and sectors and showed that rather than being a homogeneous or linear process, catching-up in terms of scien- tific, technological and industrial capabilities building is likely to be costly, difficult, nation-specific and non-systematic with sectoral and cluster idiosyncrasies. Thus, technological catching-up cannot be taken for granted. Starting from the premise that the creation of technological and industrial competence in any knowledge intensive sector is a col- lective and cumulative process, the NSI builds upon the rationale of actors and institutions within the country, involved in the creation, adoption and diffusion of new technologies. The principal actors of 1 According to Landes, over 250 years, the difference in income per capita between the richest and poorest country in the world has increased from 5:1 to 400:1. 0048-7333/$ – see front matter © 2011 Elsevier B.V. All rights reserved. doi:10.1016/j.respol.2011.09.005