Technology Transfer Readiness, Explainable AI and Financial Innovation Capability Transitions in Expanded BRICS: Benchmarking Against Advanced Innovation Economies

Abstract

This study examines the dynamics of technology transfer readiness and financial innovation capability transitions across the expanded BRICS economies, benchmarked against advanced innovation systems through explainable AI. Using a composite Innovation Capability Development-Readiness index (ICDI) constructed through principal component analysis, the paper evaluates the structural conditions enabling knowledge diffusion, industrial upgrading, and financial innovation ecosystem development. A Markov transition framework is employed to analyse how countries evolve across readiness tiers over time, capturing both persistence and mobility in innovation capabilities. The results reveal significant asymmetries in transition probabilities between advanced economies and emerging innovation systems, with several BRICS economies demonstrating gradual upgrading trajectories while others remain structurally locked in lower readiness states. These findings highlight the institutional and policy conditions required to strengthen technology transfer ecosystems. Successful countries in these areas attract foreign investment, participate in global value chains, and profit from technology partnerships. The study contributes to the literature on innovation capability formation and industrial transformation by integrating composite readiness measurement with dynamic transition modelling to inform evidence-based innovation policy.

32 pages, 6 tables, 1 figure