National systems of innovation (NSIs) make many assumptions concerning the nature of the actors, their competence, habits and practices with regard to the linkages that lead to learning and innovation, all of which are common in advanced countries. In developing countries many of these assumptions are called into question. This paper explores the utility of an innovation system approach to developing countries bearing this proviso in mind. With illustrations from telecommunications and automobile industries, the paper focuses upon the need to integrate the role of transnational corporations and international rules and disciplines into such an approach and to examine more closely the way in which local clusters can be transformed into innovation systems.

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