Emerging Markets – Innovation or die

Developing countries have a fairly clear-cut division of their economies into two parts, 'modern' and 'traditional':

• The modern part uses more-or-less advanced technology derived from developed countries.
• The traditional part uses more-or-less traditional technology.

There are inevitably high-technology sectors like aircraft which must be modern to exist at all, and sectors providing traditional staple foods and traditional services to the domestic market which tend mostly to use traditional technology. A sector may however in a given country have both advanced and traditional technology either in distinct sub-sectors (up-market and down-market) or working together - as where transformation processes are advanced and transfer processes traditional. As developed countries continue to innovate, the gap between 'advanced' technology and 'traditional' technology tends to widen.
Article: Twin innovation systems

China's Innovation System and the Move Toward Harmonious Growth and Endogenous Innovation:
The fundamental weakness of the Chinese system, having a negative impact both on the absorption of foreign technology and on domestic innovation, has to do with an economic structure that does not support learning by interaction in organized markets.
Article by Shulin Gu Tsinghua University, Beijing, China and Bengt-Åke Lundvall, University of Aalborg, Denmark

See youtube video about innovation award:
http://www.permanentinnovation.com/blog/labels/aquaduct.html