At the 123rd GRIPS Forum on May 9, 2016, Dr. Sunil Mani, Professor, GRIPS; Professor, Centre for Development Studies, Trivandrum, Kerala, India gave a lecture titled “The High Tech Innovator vs The Frugal Innovator, Comparing China and India on Innovation Activities”.

China and India are two of the fastest growing countries in the world. Their continued surge in economic growth both before and after the 2008 global financial crisis has further lent credence to the hypothesis that the economic growth registered by the two countries is sustainable as it is based on technological improvements rather than by using more factor inputs such as labour and capital. Recent estimates of total factor productivity growth lend some empirical support to this hypothesis. Both the countries have also been receiving sizeable chunks of Foreign Direct Investment (FDI) in R&D. There are also press reports of a number of innovations emanating from the two countries although systematic empirical evidence on this issue is found wanting in the literature. One of the avowed objectives of economic reforms in both the countries (embracing market socialism in China since 1979 and economic liberalization in India since 1991) was to promote competition between firms. Along with the possibility of increased competition, one also sees that both the countries have become increasingly integrated with rest of the world although on both these counts China has a higher degree of integration and better record than that of India’s. All these factors may pave the way for both the economies to invest in innovative activities as the firms in both the countries are no longer concerned with competition in their respective domestic economies, but internationally as well.  In the context, the purpose of the present lecture was to compare the two economies with respect to their innovation record since the onset of reforms in the two countries, which as argued, earlier should have facilitated this process to flourish.

The lecture began by mapping out the larger context against which one may analyze the nature and extent of innovative activities in these two economies which are increasingly referred to as technological super powers in the making. The context has five components: (i) China and in India are the fastest growing economies in the world in terms of growth rates in GDP, but their high growth has spawned increasingly a high rate of inequality. This means that the fruits of this high growth are shared only by a few in both the countries. (ii) China and India have exhibited the highest rates of growth in efficiency of resource use; (iii) China and India are the leaders (among the middle income economies) in the quality of innovations in the Global Innovation Index; (iv) Both countries have experienced Competitiveness in high technology areas such as space technology; and (v) China has become a world leader in telecommunication equipment and India a world leader in Computer software services.

Thereafter the evidence on innovative activity in China and India was presented in terms of both standard input and output indicators, namely R&D expenditure and number of patents granted. Notwithstanding the limitations of these indicators, these are the only ones that are available for both the countries for sufficiently long periods of time. Further the definitions of both the indicators are standard across the two countries. The study employed a systems of innovation framework. In both the countries an important structural change has occurred, namely that business enterprises have either become the core of the National System of Innovation (NSI) as in the case of China or are groping towards the core as far as India is concerned. This is a very desirable form of structural change as the locus of potential generation of innovations and their conversion into commercialisable products and services are residing in the same actor. All innovative countries in the world such as the United States, Japan, Korea etc. similar structures. However Chinese business enterprises are committing far more resources to R&D than their domestic counterparts, are domestically owned and have a better patenting record both within the country and indeed abroad. But India was shown to have a more efficient R&D system as the R&D cost of securing a US patent was much lower for India and this ratio was decreasing as well over time. This has made the India an attractive location for R&D activities by MNCs so much to say that India has become the largest exporter of R&D testing services to the United States- one of the largest market for such services.

In the final part of the lecture, a contrast was made between the two countries on the following eight dimensions.   

• Focus of policy and strategy
• Reforming NSI
• Role of Business Enterprises- Focus on high technology manufacturing
• Role of Universities
• Role of MNCs
• Human Resource Development in Science and Engineering
• Promotion of  technology-based start ups

• China as a manufacturer and exporter of high technology products while India as a hub of frugal innovations.

The lecture then concluded with the following observations: China and India are the fastest growing economies in the world. The contribution of technology to their respective GDP growth performance is high. China has managed to place business enterprises at the core of her NSI and these enterprises have become technologically speaking very dynamic. China has also managed to improve and reform most actors of her NSI India is attempting to place business enterprises at the core of her NSI. Her attempts at reforming her NSI is fractured, adhoc and piecemeal. India has of course become an important location for innovative activity by MNCs, thanks to her efficient way of performing R&D. China is specializing in high technology manufacturing while India is focusing more on services and in giving shape to frugal innovations.

There are also instances of cooperation between the two countries as far as technology development is concerned.

Speakers’ Profile:

Dr. Sunil Mani is Professor at the Centre for Development Studies, Trivandrum, Kerala, India and is now Professor of the National Graduate Institute for Policy Studies. Earlier he has been a visiting professor at Bocconi University, Milan, Italy, the University of Toulouse-Jean Jaurès, Toulouse, France and the Indian Institute of Management Calcutta, Kolkata, India and has also worked at the United Nations University- MERIT, Maastricht, The Netherlands as a researcher and head of graduate studies. He is specialized in the economics and policy studies of innovation and one of his most recent publications include a book with Professor Richard Nelson of Columbia University, TRIPS Compliance, National Patent Regimes and Innovation, Evidence and Experience from Developing Countries, Cheltenham, UK and Northampton, Mass, USA., 2013. He holds a PhD in Economics from Jawaharlal Nehru University, New Delhi and has done post doctoral research at University of Oxford.

At the 123rd GRIPS Forum on May 9, 2016, Dr. Sunil Mani, Professor, GRIPS; Professor, Centre for Development Studies, Trivandrum, Kerala, India gave a lecture titled “The High Tech Innovator vs The Frugal Innovator, Comparing China and India on Innovation Activities”.

China and India are two of the fastest growing countries in the world. Their continued surge in economic growth both before and after the 2008 global financial crisis has further lent credence to the hypothesis that the economic growth registered by the two countries is sustainable as it is based on technological improvements rather than by using more factor inputs such as labour and capital. Recent estimates of total factor productivity growth lend some empirical support to this hypothesis. Both the countries have also been receiving sizeable chunks of Foreign Direct Investment (FDI) in R&D. There are also press reports of a number of innovations emanating from the two countries although systematic empirical evidence on this issue is found wanting in the literature. One of the avowed objectives of economic reforms in both the countries (embracing market socialism in China since 1979 and economic liberalization in India since 1991) was to promote competition between firms. Along with the possibility of increased competition, one also sees that both the countries have become increasingly integrated with rest of the world although on both these counts China has a higher degree of integration and better record than that of India’s. All these factors may pave the way for both the economies to invest in innovative activities as the firms in both the countries are no longer concerned with competition in their respective domestic economies, but internationally as well.  In the context, the purpose of the present lecture was to compare the two economies with respect to their innovation record since the onset of reforms in the two countries, which as argued, earlier should have facilitated this process to flourish.

The lecture began by mapping out the larger context against which one may analyze the nature and extent of innovative activities in these two economies which are increasingly referred to as technological super powers in the making. The context has five components: (i) China and in India are the fastest growing economies in the world in terms of growth rates in GDP, but their high growth has spawned increasingly a high rate of inequality. This means that the fruits of this high growth are shared only by a few in both the countries. (ii) China and India have exhibited the highest rates of growth in efficiency of resource use; (iii) China and India are the leaders (among the middle income economies) in the quality of innovations in the Global Innovation Index; (iv) Both countries have experienced Competitiveness in high technology areas such as space technology; and (v) China has become a world leader in telecommunication equipment and India a world leader in Computer software services.

Thereafter the evidence on innovative activity in China and India was presented in terms of both standard input and output indicators, namely R&D expenditure and number of patents granted. Notwithstanding the limitations of these indicators, these are the only ones that are available for both the countries for sufficiently long periods of time. Further the definitions of both the indicators are standard across the two countries. The study employed a systems of innovation framework. In both the countries an important structural change has occurred, namely that business enterprises have either become the core of the National System of Innovation (NSI) as in the case of China or are groping towards the core as far as India is concerned. This is a very desirable form of structural change as the locus of potential generation of innovations and their conversion into commercialisable products and services are residing in the same actor. All innovative countries in the world such as the United States, Japan, Korea etc. similar structures. However Chinese business enterprises are committing far more resources to R&D than their domestic counterparts, are domestically owned and have a better patenting record both within the country and indeed abroad. But India was shown to have a more efficient R&D system as the R&D cost of securing a US patent was much lower for India and this ratio was decreasing as well over time. This has made the India an attractive location for R&D activities by MNCs so much to say that India has become the largest exporter of R&D testing services to the United States- one of the largest market for such services.

In the final part of the lecture, a contrast was made between the two countries on the following eight dimensions.   

• Focus of policy and strategy
• Reforming NSI
• Role of Business Enterprises- Focus on high technology manufacturing
• Role of Universities
• Role of MNCs
• Human Resource Development in Science and Engineering
• Promotion of  technology-based start ups

• China as a manufacturer and exporter of high technology products while India as a hub of frugal innovations.

The lecture then concluded with the following observations: China and India are the fastest growing economies in the world. The contribution of technology to their respective GDP growth performance is high. China has managed to place business enterprises at the core of her NSI and these enterprises have become technologically speaking very dynamic. China has also managed to improve and reform most actors of her NSI India is attempting to place business enterprises at the core of her NSI. Her attempts at reforming her NSI is fractured, adhoc and piecemeal. India has of course become an important location for innovative activity by MNCs, thanks to her efficient way of performing R&D. China is specializing in high technology manufacturing while India is focusing more on services and in giving shape to frugal innovations.

There are also instances of cooperation between the two countries as far as technology development is concerned.

Speakers’ Profile:

Dr. Sunil Mani is Professor at the Centre for Development Studies, Trivandrum, Kerala, India and is now Professor of the National Graduate Institute for Policy Studies. Earlier he has been a visiting professor at Bocconi University, Milan, Italy, the University of Toulouse-Jean Jaurès, Toulouse, France and the Indian Institute of Management Calcutta, Kolkata, India and has also worked at the United Nations University- MERIT, Maastricht, The Netherlands as a researcher and head of graduate studies. He is specialized in the economics and policy studies of innovation and one of his most recent publications include a book with Professor Richard Nelson of Columbia University, TRIPS Compliance, National Patent Regimes and Innovation, Evidence and Experience from Developing Countries, Cheltenham, UK and Northampton, Mass, USA., 2013. He holds a PhD in Economics from Jawaharlal Nehru University, New Delhi and has done post doctoral research at University of Oxford.