Chapter one: Introduction

1.1. Research background
At  the  turn  of  the  21st  century,  the  main  vector  of  economic  development underwent  multiple  changes,  which  started  to  form  a  new  kind  of  economy,  where knowledge  is  becoming  the  source  of  the  economic  growth.  This  means  that  the dominant  factor  of  economic  growth  is  considered  to  be  the  system  of  scientific knowledge, new technologies, innovative processes and services, along with new forms of business organization. 
The most developed countries of the modern world economic system are post-industrial, which means that their GDP is mainly formed due to the economy’s tertiary sector – the service industry and knowledge-intensive sphere. Under these conditions, innovations become the driving force of the economy, leading to the development of all other sectors of the economy due to the innovative effect of pricing policy. Thus, the indicators of economic growth of the country as a whole depend on the effectiveness of innovative activity.  
To  control,  regulate  and  effectively  manage  the  country’s  innovation  activity allows a well-built National Innovation System. That is a developing subsystem of the national economic system, and is represented as a set of interconnected units of the innovation  infrastructure  as  well  as  financial,  legal  and  social  institutions  that purposefully  generate  scientific  knowledge  and  transform  it  into  new  technologies, products and services, together with providing commercialization and financing for the subsequent fulfillment of economic interests.  

1.2.Statement of Problem
The  main  purpose  of  this  paper  is  examining  the  volume  of  influence  of international trade on the development of innovation capabilities of the country on the example  of  the  BRICS  countries,  provide  theoretical  foundations  and  practical recommendations for other countries regarding the use of foreign trade in the innovative activity  based  on  knowledge  and  the  development  of  mutual  cooperation  in  the innovation sphere.
The relevance of the chosen study is due to the fact that the modernization of the economies of the BRICS countries and the development of their innovative processes is a new example of the formation of further sustainable and balanced growth of national economies based on knowledge and their development, as well as an integration on this basis into the world economy and the international capital market. The most important catalyst for the modernization of the economies of BRICS countries is the use of such an external economic factor as international trade, which affects the development of their national innovation potential. The problem of taking into account the role of trade as  a  technology  transfer  in  the  innovation  development  of  the  BRICS  countries  is important, but has not been sufficiently studied yet. 
The study mainly uses the method of qualitative analysis with theoretical and statistical analyses as well as conduction of empirical tests. Qualitative analysis is used to explain the current situation in international trade and innovation of the high-tech industry in the countries selected for the research, putting forward the hypothesis that international trade contributes to the development of the country’s innovative activity and,  also  has  a  high  impact  on  National  Innovation  System  of  the  country.

Chapter two: National Innovation Systems and their main characteristics in the BRICS countries

2.1. NIS: Historical Background, definition and structure
Innovative development, conditioned by the development of productive forces, is objectively  inherent  in  every  national  economy.  However,  at  a  certain  stage  of development it is formed into a specific system, called the National Innovation System, which operates according to the principles characteristic of the system contained. The systemic nature of NIS means that technological development is not a chain of one-way directed  causal  relationships  leading  from  research  and  development  (R&D)  to innovations, but rather the process of interaction and feedback of the entire complex of economic, political, social, organizational and other factors that have influence on the creation, implementation, commercialization of innovations and financial support of these processes. NIS are formed under the influence of many factors objectively linked to  each  country,  being  the  determinants  of  the  direction  and  speed  of  innovative activities development. Worldwide experience in the economies’ development of the industrialized countries has shown that innovative development is possible in countries that implement the development strategy of their NIS, taking the specifics into account.  
The founders of the theory of the formation of National Innovation Systems can rightfully be considered Freeman, Lundvall and Nelson, who analyzed the development of innovations in different countries and, on this basis, gave the definition of NIS. 

2.2. The role of innovations in the economic growth
The system of market relations is characterized by many of constant economic changes.  This  is  due  to  the  fact  that  economic  processes  take  place  in  a  changing environment (natural, social and demographic), which also changes the parameters of economic  actions.  However,  the  main  factor  that  drives  the  market  mechanism  and keeps it on track are innovations. 
In  general,  the  term  “innovation”  means  novelty,  renewal,  renovation. Consequently, innovations in a market economy are understood as new goods, methods and ways of the production and transportation of goods, new markets and forms of economic organization.  
The  life  cycle  of  innovations  consists  of  several  stages:  invention,  further transformation  of  this  invention  into  innovation  through  an  investment  mechanism, introduction and distribution of a new product, technologies, combinations of factors of production and new forms of organization. Innovations in the economy have two main strategic  goals:  first,  they  provide  competitive  advantages,  and  secondly,  offer  an important driver of the economic growth.
In  the  1930s  Schumpeter  noted  that  the  introduction  of  products  with  new properties has a direct affection on the economic development of the country together with the use of new technologies and techniques for the implementation of production processes as well as changes in the production organization, its materials and technical support.