Foreign transnational corporations in BRICS economies: the innovative aspect

The BRICS countries (Brazil, Russia, India, China and South Africa) are attractive economies for foreign multinational corporations (FMNC) because of their growth. The current trends are connected with manufactures and services strengthening, with R&D investments increasing, with effective use of benefits from globalization (integration in world global value chains, creating own global value chains based on the experience of foreign transnational corporations), with growth of the internal demand and household incomes. FMNC entry to the domestic market of the host country raises the question of developing its further strategy before the national business. There can be various ways of economic interests implementation between foreign transnational corporations and local firms. It depends on the extent of industry development, national business competitiveness and its innovative capacity, government support of the host country and aims of foreign corporations. The market exit of national business is only one of the chosen strategies. In all other cases (direct competition, focusing resources on niche brands or products with competitive advantages, joining FMNCs) it is necessary to change the market behavior. Here one cannot do without innovations. All three agents actively participate in this process. The governments of host countries create institutions that are factors of innovative development. They are competition and favorable business environment. Competition in the industry of FMNC interest makes it possible to implement and develop all types of innovation. Besides, the basic factor in development of innovations in some industries is governments, not greater competition or MNCs. Therefore, the government's role in innovations is estimated ambiguously in BRICS countries. For MNC branches to build their business in host countries they are to gradually establish links with local companies. With these links the well-run export, most likely, will be more sustainable and profitable for host countries. It will provide a higher level of the value added created in the host economy and greater competitiveness of a domestic business. China's and India's industrial development that combined efforts to associate MNCs export-oriented transactions with the development of the internal capacity can be an example. The above ensures national business innovative activity of BRICS countries. The analysis of the statistics on commodity and services export, on creation of the value added by industries, on the position in the world economy by these indicators and innovation policy-making within the country confirms this. However, the same figures define and identify opposite trends when strengthened FMNC activities in the host country do not result in growing exports and its structure improvement. Thus, there is an obvious question of who has more impact on innovation of the host country: FMNCs operating in their own interests or national businesses pursuing their own interests. It is rather problematic to answer this question.

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