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In some respects innovations in emerging economies like India and China have been astonishing. In India for example, the ability of leading companies like Tata Motors, Larsen & Toubro, ICICI Bank to pioneer 'customer-focused innovation' has been breathtaking. They have used IT to continually transform their firms' products, services, processes and business models with emphasis on speed of results.

Similarly, we see the emergence of companies like Tencent Communications in China, the owners of QQ, the world's largest instant messaging social network. QQ has been remarkable. It has 330 million active user accounts and its projected revenues for this year stand at $1 billion with an operating profit of $0.5 billion. The fact that a Chinese social network company can show such profits in a country where 75 per cent of Internet users earn less than 2,000 RMB/month (less than $300/month) is a remarkable achievement by any standards. CyWorld in South Korea is a similar story. Entrepreneurs have taken Internet-based services, developed new business models around digital goods and virtual currencies and adopted them to local realities to create world-beaters.

But as important as these examples are they also highlight a worrying trend; namely that innovation in the emerging economies centres on the deployment of existing technologies and services. This focus on the Development side of Research & Development (R&D) may well be innovative, but it has its limits. It is important to distinguish here between innovation and R&D. The former is about the application of technology to develop new services and business models while the latter is about the foundations for new discovery upon which new technologies can be invented and subsequently developed.

Emerging economies are biased towards innovation in development rather than breakthroughs that come from basic research. This is worrying because it makes immediate concerns the priority. Longer term problems and the future are underplayed. Such emphasis on short-term innovation risks diminishing the emerging economies’ role in the world. Indian and Chinese Chief Information Officers often receive much praise from Western firms who envy their output. But the danger is that these companies are avoiding the cost and risk of developing custom applications from scratch. Instead they opt for packaged software from established vendors – based in the developed economies of the West. Ironically, in the West, R&D is also increasingly atrophied: basic research is being replaced by a risk-averse short-term attachment to 'go-to-market' innovation.

Despite the many innovations we see coming from the emerging economies, there is actually an atrophy of R&D in global terms. The fact that the US, despite reining in spending on basic research, can still lead the world in technological innovation in terms of the global share of exports, services and patents attests to the absence of this capability in the emerging economies at present.

What Asian innovators have shown through their greater penchant for risk taking is an adept ability to innovate through necessity. Their more dynamic growth and the foreign investment establishing R&D centres in their home markets means there is now the potential for an indigenous R&D capability to emerge. But for this to happen, the emerging economies will have to defy the risk-averse, short-term mindset of the West.

To break the downward spiral of R&D spending and ambition, and take the world into a new era of innovation, the emerging economies must ensure that their optimism does not get swamped in the rising tide of Western pessimism and economic uncertainty. It could be a Brave New World indeed.

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Norman Lewis is chief strategy officer at Wireless Grids Corporation and the author of Digital Kids