India and China have made clever use of foreign technology – assembling it, copying it, servicing it and customising it – but, as Simon Cox explains in a special report in this week’s Economist, their firms have yet to create too much to rival it. However, he adds that while “techno-nationalists” may worry about this, economists would find much to applaud.
The special report says that India does not need to focus on invention per se in order to flourish. Instead, if it gainfully absorbs, assimilates and uses the technology available in the country, India's economy could transform itself as China's has done.
“Indian and Chinese firms have a comparative advantage in finding new uses for existing technologies and combining them in novel ways,” he says. “This kind of ‘architectural innovation’ may be scientifically modest but it can nonetheless be commercially significant. This was, after all how Japan’s electronics firms came to dominate their market.”
Innovate or imitate?
The Economist special report asserts that while India and China cherish the idea of pushing back the limits of technology, invention is risky, costly and frustrating work. Imitation still has much to recommend it.
The report argues that India and China have more to gain from the adoption and assimilation of technology than from invention. The most urgent task for the two countries is to make wider use of knowhow that already exists, the report says, citing India’s generic drug makers as an example.
The Economist special report maintains that India could resolve not to invent another thing and still prosper mightily. It does not even have to catch up with the world as it has so much to gain merely by catching up with itself by narrowing the gap between its best firms and the rest. For China’s part, its technological ambitions are perhaps too great. Its "techno-nationalists" want home-grown technologies that have the right pedigree, whether or not they are right for their consumers. They want to build national champions akin to Toyota or Samsung. But the report says that China's best firms take a different attitude: they care about winning customers more than winning scientific prizes. The report cites Huawei, China's leading maker of telecoms equipment, as a prime example.
India, for its part, surveys the future with uncharacteristic optimism. Its technological confidence has grown immeasurably thanks to the success of its software and IT firms. The heirs to Aryabhata and Brahmagupta, India’s digital ambassadors have won acclaim for their mastery of ones as well as zeroes. But even as India’s technological powers make a splash in the world, they stir only the surface of its own vast society. India produces more engineering graduates than America. But it has only 24 personal computers for every 1,000 people, and fewer than three broadband connections. India’s billion-strong population cuts both ways. Whenever an Indian demographic appears as a numerator, the resulting number looks big. But whenever its population is in the denominator, the number looks small. As of now, India matters more to technology than technology does to India.
The Economist special report concludes that ultimately it will be the countries that are willing to mix and match imported knowledge with ideas of their own that will thrive.
About Simon Cox, South Asia Business Correspondent, The Economist
Simon Cox covers business and economics in South Asia for The Economist. He was previously economics correspondent for the paper, based in London. He joined The Economist in 2003, after studying at Cambridge, Harvard and the London School of Economics and working at the Russell Sage Foundation in New York.
About The Economist (www.economist.com)
The Economist is a weekly magazine offering timely reporting, concise commentary and comprehensive analysis of global news. With objective authority, clarity and wit, The Economist presents the world's political, business, scientific, technological and cultural affairs and the connections between them. Because of its global editorial perspective, it is read by more of the world's political and business leaders than any other magazine. After 26 years of continuous global growth, The Economist has a worldwide print circulation of more than 1.3 million. Economist.com now offers complimentary access to content under one year old.