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 the new powers it examines their linkages with the old powers, 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. It is clear that a new dynamic has been unleashed but it is not yet clear whether the old powers are contributing to their own demise or renewal. 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.