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Onward march of Asia?


The just released Global Innovation Index 2020 (covering 131 countries), a comprehensive approach which encompasses both input and output domains of innovation, highlights the challenges that Asia is presenting to the western world.

Onward march of Asia?

According to the index (https://www.wipo.int/edocs/pubdocs/en/wipo_pub_gii_2020.pdf), while the top ten performers are dominated by the US and Europe and have been since the start of these rankings, some Asian economies are either inching to the top ten, have now become part of the exclusive club, or are maintaining their position in the top ten. In terms of some movement towards the top ten, China is ranked in 14th place for the second year in a row, Hongkong is in 11th place (from 13th last year), and Japan is in 16th place (slight decrease from 15th place last year). South Korea is now in the top ten (10th), having moved up from 11th place last year, while Singapore maintains its 8th place. Malaysia (33rd), Philippines (50th), India (48th), Thailand (44th), Vietnam (42nd) round out the top 50 Asian economies. However, the report does point to a growing inequality between the best and emerging performers compared to other parts of Asia, Africa and Latin America. 

It is clear that to be in the top ten or thereabouts requires a comprehensive, integrated and cohesive approach to an entire innovation eco-system comprising sophisticated inputs (infrastructure, business environment, institutional capability, investment in human capital including all tiers of education, research by Universities and businesses, and access to capital among other things) and outputs such as high value goods and services, patents, advanced exports, creative goods and services and strong productivity growth, among other things.

India’s performance in more detail

For India, as another emerging global player, 48th place in the world (and progressively improving year on year e.g ranked 52nd in the world in 2019) is a strong performance, far better in relative terms than its performance in other key rankings such as the UN Human Development Index and Yale Environmental Protection Index. India is closing in on being in the top one-third of ranked countries (131 in total). India’s output ranking is 45th, better than its overall ranking, while its input rank is 57th, both of which have improved since the last year. Thus, India’s capacity to effectively and efficiently translate inputs into outputs or put alternatively, its capabilities in production, distribution, technology transfer and absorption are on the rise. In addition, according to the Index, India, along with Vietnam, Thailand and the Philippines are innovation achievers, which are those countries that are performing better than their level of economic development would imply. 

India has improved in a number of indicators. A significant area of improvement is what we describe as macro-economic framing, namely the overall business and institutional environment. For example, quality of regulation, political stability and government effectiveness have improved (although still some way off world’s best). Nonetheless, these are important directional changes and reflect the Government’s emphasis on improving the ability of businesses to plan and conduct their operations with greater certainty and efficiency. The move to online processes and single window for Government approvals and clearances, among other things, has given rise to greater accountability and transparency. These factors are also behind India’s improved performance in the World Bank Doing Business Index. In a similar vein is the continued moderate-strong performance in access to credit including microfinance, protection for investors, market capitalisation, and venture capital to support business. 

Further areas of improvement or emerging strengths relate to key components of the knowledge economy. Included here is knowledge diffusion, as part of knowledge and technology outputs, in which India rises from 23rd last year to 10th this year. This is on the back of best in class performance in ICT services exports, and improvement in export of high technology goods (42nd). In terms of knowledge inputs, India is strong and improving in its knowledge absorption capability (39th) or the ability to access and utilise knowledge, and solid if weakening performance in university/industry collaboration (45th), and joint ventures/strategic alliances (47th).  

The Global Innovation Index also identifies the quality of innovation, as reflected in patent applications, citable documents (h-index) and the average score of the 3 top ranked institutions in the QS ranking. These three parameters are reflective of strong education and research capabilities. While the US and Europe also dominate in quality of innovation, it is instructive that India, Malaysia, Thailand, Japan and South Korea all rank higher on quality than in their overall innovation ranking. Thus it is not just about innovation in some domains that is important, but the quality and value add clearly matter. The Global Innovation Index also measures science and technology clusters on a sub-national basis, drawing on measures including the location of inventors and publications. Clusters are an important demonstration of the agglomerations or critical mass of innovative capabilities, skilled labour pools and flows of knowledge on a spatial basis.  On this score, a Japanese cluster leads the world, followed by China and South Korea. Of the top 100 clusters, China has 17 clusters while US leads with 25. India has three ranked clusters in Bengaluru, Delhi and Mumbai. There is scope in our view for further clusters in India, including in Pune and Hyderabad, to be recognised in future years.

Yet one should not imagine that all is rosy in the India garden. Education expenditure remains challenging (although improving), while pupil/teacher ratios have gone backwards and are certainly in the lower end of the global spectrum. More investment is required. While science and engineering graduates in the tertiary sector are ranked 12th, overall gross enrolment in tertiary places India in 84th position. Thus there is a pressing need for India to provide the capacity and wherewithal for greater participation of its young population in tertiary education. 

A further related point is that India is not yet a strong performer in knowledge intensive employment (90th).  This is in part a statement of India not creating enough high value jobs, and the weakness of the tertiary education system in not meeting skills needs of industry. Careful implementation of the New Education Policy will help in these matters. Further, is the clear gender divide. Females with advanced degrees who are employed is ranked a poor 101st. Clearly, economic and social barriers are also at work here.

Another key issue is that of the apparent disconnect between India as an ICT industry compared to its broader social remit. While India is number one in the world on ICT services exports (mainly through outsourcing), domestic ICT access and usage are both ranked 108th.  A more consistent approach to ICT is required encompassing both industry development, and wider social diffusion through awareness, access and training in usage.

India continues to lag behind most in the world on ecological sustainability, at 98th place, with some improvement from a dismal 117th last year. Urgent and comprehensive action is need on energy efficiency, natural resource management, recycling and pollution control.

Finally, and somewhat surprisingly, is that India is not a particularly strong performer in creative goods and services. India has a rich culture, tradition and heritage which can be further developed.

The future

What of the future? Looking ahead, the impact of COVID-19 is, and will clearly be, significant for  innovation and the index. 

Of concern is the distinct possibility that countries will (further) retreat into protectionist mode, which would inhibit the global movement of ideas, knowhow and people, essential for global and national knowledge based economies.  Likewise, is the strong possibility that expenditure on research will be constrained as economies are battered by the pandemic. However, against this is that there is likely to be considerable industrial and business churn as old industries fade away, and new ones emerge. Such new industries would need innovation and new business models to develop and expand, while education and training institutions have key roles to play in supporting the shift of labour from old to newer activities. Finally, will be a clear requirement, in our view, for global collaboration in science and to undertake research in a range of activities, including for example pandemic mitigation and preparation, drawing on the specialist capabilities of nations. These various possibilities are alluded to in the Innovation Index.


Anand Kulkarni, Associate Director, Planning, Performance and Risk, Victoria University Australia. The opinions here are entirely the author’s. 

 His book India and the Knowledge Economy, Performance, Perils and Prospects, is published by Springer

https://qrius.com/onward-march-of-asia/

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