This paper is concerned with global shifts in innovation power. It shows that Brazil and India are accumulating significant innovation capabilities. Most explanations concentrate on factors within these rising powers. This paper concentrates on explanatory factors which have their origin in the old powers (Europe and USA).
In order to understand the build-up of innovation capabilities in Brazil and India, it examines their linkages with firms in Europe and USA, concentrating on the value chains which connect them. It shows how the organisational decomposition of the innovation process emanating from the old powers contributes directly and indirectly to the build-up of innovation capabilities in the new powers. The empirical evidence comes from the Brazilian auto and the Indian software industry and the value chains which link them to the United States and Germany. Two very different industries show a core of common findings on processes which contribute to building advanced innovation capabilities in India and Brazil.