Why should India move towards an Innovation Economy?

By Amir U. Khan

India has been riding a wave of economic growth for more than two decades now. Even when the rest of the world, especially the developed part, has faced recession and depression, growth in India has persisted. Now, as the western world prepares itself for another gloomy forecast, India’s growth prospects continue to burn bright and we are looking at growth rates above the 7 per cent mark this year too. Much of this sustained growth is explained to be on account of the young population in the country that only generates demand but also then works to create supply. This youth population then constitutes what is referred to as the demographic dividend that countries like India reap when they pass through transition and enter maturity. Youth indeed, define and generate growth. However, what is imperative is that they be educated and skilled and innovative.

Given India’s inherent strengths in Software and in Business Process Outsourcing, it is legitimate therefore to think that India has a robust and lively education sector that produces human resource to man the knowledge economy that is emerging. You would expect a large number of colleges and Universities at the State level providing excellent research, training and teaching inputs. The truth is that India provides really poor quality training and teaching to its youth and is therefore facing a large number of challenges that appear to become foreboding in the times to come. For a country that has gained a reputation for producing large numbers of software professionals that work on modern technology, the standards of education provided and research conducted are shockingly poor.

India needs high quality educational institutions and a large number of these in order to keep producing graduates who would work in the competitive global economy. It is critical for India now to find ways and means to make its business and society more innovation-based than it currently is. It is not only for our own strategic interests. In a global world, if we are to become an important competitor and contributor, we will have to leverage our strengths. These are: a very young population which can pick up new things faster than an older population; a large and growing market that allows greater space to innovation than what can be offered by a small and stagnant economy; and a democratic system based on the rights of individuals to try different things.

This emphasis on innovation will be of special interest to the government if one can establish that the knowledge sector is a key sector which, itself, could provide employment to large sections of India’s youth. Given India’s demographics, finding productive employment for those entering the labour force is of great political and social significance to the nation. We need to know what needs to be done in the form of training. Are there enough institutions to meet the demand that is being generated? In this context, the role of innovation, R&D, and specialized knowledge, has to be studied. Is the Indian business and academic environment well-suited for developing an innovation ecosystem and a knowledge-based economy? How can public policy act as a catalyst in this process? Here again, the experiences of other countries will be very useful. Within home, there are specific disciplines where some Indian states show distinct comparative advantage? Is there anything special in these states in terms of policy, institutions, or history? How much of these can be replicated in other states?

A knowledge-base would also help us in solving some of our most pressing problems. The political leaders and the government of a knowledge-based economy will be able to take informed decisions about public policy, informed businesses will undertake profitable activities where opportunities abound, and the debates and discussions regarding the polity will become more sophisticated. Knowledge enables and empowers people in their tryst with innovation. And innovation that is sustainable is the tool in crowded markets that helps create product differentiation and is therefore commercially successful…. It will be important for us to look at laws governing the innovation industry, e.g., India’s protection of IPR. The law alone is not enough; one must also look at enforcement — the methods and resources. In this context, practices in other countries must also be looked at. However, desirable practices need to be absolutely defined and not by comparison alone. For instance, China’s IPR laws and their enforcement are particularly weak. This should not lead to any complacency on India’s part with the system that it currently has.

*This is the second in a series of guest blogposts by panelists and participants at the Design Public Conclave. Click here for more thoughts from our speakers.

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