The battle for control of the global economy in the 21st century will be won and lost through the pace of technology innovation and adaptation
Innovation and entrepreneurship are two important building blocks of any fast-growing economy. It is estimated that 50 percent of the per capita income gap between India and the US cannot be explained by investment in physical capital, but by the country’s accumulation of knowledge and innovative capacity.
Innovation has become at the heart of economic policy in the 21st century.
Developed and developing countries alike are now in a race to adapt to a technology-oriented entrepreneurial society. The battle for control of the global economy in the 21st century will be won and lost through the pace of technology innovation and adaptation.
The growing technological rivalry between China and the US, the desire for new global supply chains and the looming global economic downturn have gained prominence. How well is India positioned to benefit from these changes?
twists and turns
India has emerged as a global hub for cutting-edge R&D with some of the brightest minds in the world, offering a unique blend of massive market opportunities, technical skills and a highly scalable workforce. India has benefited from increased political focus on “innovation diplomacy” in building economic ties with other nations.
Innovation, R&D and startups have been a key agenda item in almost all of Prime Minister Narendra Modi’s bilateral visits. The launch of India-Israel Industrial R&D, a fund for technological innovation, and India hosting the Global Entrepreneurship Summit reflect the importance India has placed on innovation diplomacy.
India has also benefited from a global talent race and rapid international labor mobility, particularly immigration of highly skilled workers. The number of college-educated migrants from India to the United States, United Kingdom and Canada has more than doubled over the past two decades.
Skilled migrants can serve as effective conduits for many forms of global knowledge sharing in an interconnected world. More than half of Silicon Valley’s highly skilled technology workers and entrepreneurs are foreign-born. Almost 25 percent of Silicon’s companies are run by Indian bosses.
The positive effects of immigration on knowledge transfers to India have been demonstrated in scientific publications and inventions.
Studies that focus on spillover effects on inventions and scientific publications may only capture the lower bound of the total knowledge dissemination that occurs as a result of immigration, given the availability of information and communication technologies and easier access to the internet with tablets and smartphones , which help individuals to become facilitators of knowledge dissemination.
Knowledge diffusion and innovation are no longer location-specific, but are becoming global in nature. The internet has become a powerful force for global knowledge sharing and dissemination. The Internet connects customers and businesses worldwide, enables remote workforce deployment, provides instant access to information about foreign locations, and much more.
The Internet’s vast improvements in connectivity and reduced friction points have facilitated the dissemination of knowledge.
While online opportunities are a powerful tool, diaspora connections are still important and influence business and knowledge sharing. Diaspora connections are still important, although online platforms now offer many of the same features that diaspora networks provided in the past (e.g. information about potential developers, monitoring and reputation bases).
Despite rapid progress, India is not yet one of the most innovative nations in the world, be it in terms of the efficiency of tertiary education, patent activity, researcher density or research and development spending. India is currently ranked low in the Global Innovation Ranking.
India’s investment in R&D is extremely low at less than 1 percent of GDP compared to China, which has managed to increase its R&D investment to over 2 percent. The number of articles published by China’s scientific community has been growing at a rapid pace, but in India it has remained comparatively flat. What can India do?
The new face of globalization
Innovation and entrepreneurship are two key factors that will shape future growth and job creation. Policy makers need to address a broader range of investments in innovation and knowledge creation, including a stronger role for the private sector needed to transform investment in innovation and knowledge into growth and jobs.
First, India needs to build a bridge to bridge the current knowledge gap that exists between different actors in the science and technology field within the country. This bridge needs to be integrated into the private sector.
There is currently no collaboration between CSIR laboratories and private laboratories in India.
Second, innovation has become more global than it used to be. Knowing how diaspora connections can act as an important mechanism of knowledge dissemination and brain gain remains a high priority.
India will benefit from the launch of the Indian equivalent of the Innovation Research Program for Small Businesses, similar to the platform launched in the US that benefited small entrepreneurs.
Third, unlike China, which is aging rapidly, India has much to gain from its youth surplus and demographic dividend. India’s population structure will remain ‘young’ for the foreseeable future, and young demographic trends tend to encourage innovation and entrepreneurship.
The strong diaspora links that India has with the global and US business community will enable it to benefit from the changes in global supply chains.