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A Lack of Real Innovation in India and China

Alarmists, especially in the US, fear that China’s and India’s combination of raw brainpower and raw ambition will threaten America’s technological leadership, while skeptics dwell on the countries’ shortage of national champions and its dependence on foreign technology, as witnessed by the shallow penetration of computing in India and the slow spread of 3G phones in China.

Both India and China believe they can succeed in high-tech markets dominated by the West and Japan, and even plan manned lunar missions. However, while ‘the West’ is alarmed by this new self-confidence, the report, consisting of 10 articles, shows that overall, China and India are not innovative enough to threaten the West’s or Japan’s technological pre-eminence just yet.

Starting with Running fast - Technology in China and India, the authors claim that while China and India are back at the forefront of innovation, after a long period of absence, they still have a lot of catching up to do. Both need to, for example, make wider use of know-how that already exists, instead of hindering its diffusion.

In Leapfrogging or piggybacking? , the authors argue that even though they have been making huge progress, especially regarding information and communication technology, the economies of India and China are not as sophisticated as they appear and still have a long way to go.

Even concerning drug development, India’s approach is Transcending the genre. As imitations still crowd out inventions, few Indian drug companies are prepared to bear the deep risks that new drug research entails. As the authors note: “Invention is a fine thing, but best done on somebody else’s balance sheet.”

This fits with an apparent overall trend, as India and China feel that they have better things to do than pushing back the limits of technology, seeing invention as risky, costly and frustrating work. Thus the credo seems to be Imitate or die

In Old parts, but a new whole , China’s new approach to old technologies is examined more carefully and critically. The authors argue that instead of inventing original products, many companies add some original tweaks to products and technologies bought from outside companies, hence improving it. Chinese firms’ future lies in browsing through existing technologies and components, and combining them in new ways.

Other titles in the report include:

• Consumer power in China
• China’s e-commerce frontier
• The PC business in China
• On the phone, not online in India
• Moving forward

Imitation over Invention
Overall, this special report has found much to support the fears of the techno-nationalists: India and China’s precocious economies have done more piggybacking than leapfrogging. They have made clever use of foreign technology, but their firms have yet to create very much to rival it. The Economist certainly does not get upset about this, instead arguing that a country should face the risks and frustrations of invention only when it has no easier route to economic progress.

However, the technological progress of any nation depends on the country’s political and institutional framework as much as on it’s people’s inventiveness; societal rules must reward innovation, without stifling diffusion and collaboration. While the West’s governance has served its high-tech firms admirably well, China and India have yet to show they are able to solve that problem.

Related Material on Atlantic Community:

• Henrik Schmiegelow on Asia’s International Order
• Eckart von Klaeden on India’s Changes
• Philippe Legrain on Immigration Promotes Innovation

The summary above was prepared by Benjamin Schoo of the Atlantic Community editorial team from “A Special Report on Technology in India and China” published in The Economist on November 10, 2007