Media article "India on Global R&D Map" by Pranav N Desai

India on Global R&D Map
by
Pranav N Desai
The New Indian Express; 16 Aug 2011

Globalisation of innovation has emerged as a contentious issue due to its differential impact on economies at different levels of development. There is also a growing realisation that R&D and codified knowledge are important but not the sole factors that promote innovations and that most of economically useful knowledge has a tacit dimension having equally vital role.

There are several actors, institutional mechanisms and processes including informal and formal interactions that help leverage tacit knowledge. Technological capabilities are enhanced by a learning that is determined not only by codified knowledge in R&D output such as publications, patents and designs but also by interactive learning processes of international collaboration, inward and outward foreign direct investments (FDI) and by the general socio-economic environment. This realisation has given boost to a rising trend in building global R&D alliances and knowledge networks. Recently, a good number of new technology or research alliances worldwide were reported in six major sectors: information technology (IT), biotechnology, advanced materials, aerospace and defence, automotive, and non-biotechnology chemicals revealing greater interdependence in these sectors. Thus, the emerging technologies have also helped unfolding the globalisation process. At the same time, social capital or research network capital is also surfacing as an explanatory variable of innovation.

India has attained a predominant position by attracting a major share of FDI in R&D in the last decade. It has achieved a trade surplus with the USA in R&D service trade. There is also a sudden jump in high-tech export of manufactured export in 2010. A significant structural change in manufactured exports has been observed. Between 2002-03 and 2007-08, the proportion of low-tech export declined from 66 to 56 per cent. As against this, the share of medium and high-tech rose from 22 to 30 and from 7 to 14 per cent respectively. Corresponding shares in patents filed under the PCT reveal that the high-tech patents enjoyed the maximum share of 56 per cent followed by medium-tech with 31 per cent and low-tech only 13 per cent.

This reveals rising technological capability and a positive signal though India will have to cover a lot of ground to reach the global average of 21 per cent. It is also essential to probe whether structure of technology-intensive exports holds any relationship with economic development. It is in the preceding context that India's different forms of international cooperation efforts require attention.

India's efforts in international science and technology cooperation were initiated in the 1950s. These efforts have been undergoing transformation through different phases of regulation and deregulation of economy. The unfolding of globalisation has tended to change the routes, nature and magnitude of this process. There has been an unprecedented increase in the number of international R&D collaborations. This phenomenon was confined to the triad countries (US, Europe, Japan) so far and South Korea, Taiwan, Hong Kong and Singapore followed. Hence, it is not surprising that academic interest was confined to this region rather than to the emerging destinations of R&D collaboration.

In India, which has wide socio-economic disparities, this process might introduce new challenges and opportunities for innovations and policy-making. Scholars have argued that globalisation of R&D by foreign firms divert resources from the main development needs and create high-tech islands and widen disparities. Others perceive this process as capacity enhancing with the changing nature of R&D and collaboration pattern.

The structure of the International System of Innovation is also changing. As far as world share of gross domestic expenditure on R&D (GERD) is concerned, North America still remains the dominant region with 37 per cent share. Asia has now emerged as the second largest investor, with 32 per cent, overtaking Europe. Asia also had the highest number of researchers in the world accounting for 37 per cent compared to Europe (33 per cent) and North America (25 per cent). The global share of North America in the patents issued by the USPTO and EPO remained at the top. The share of Asian countries was higher than Europe. During 2006, the share of patents originating from Asian countries in the patents issued to residents of foreign countries by the USPTO was also high. Countries like Japan, China and India contributed the overwhelming portion. Thus, the Asian regional S&T order still remains hierarchical as there is unequal distribution of S&T resources, intellectual property rights and the digital divide is threatening to widen. This also explains the divergence in their innovation system and its role in economic development.

With Asia's integration with the global economy there are signs of rapid intra-Asian economic integration. Apart from North-South and South-South FDI flows, it is estimated that intra-Asian FDI flows accounted for about 40 per cent of Asia's total FDI flows. Moreover, some changes are also taking place in the mode and structure of outward FDI (OFDI) from developing countries that may constitute the third 'wave' in OFDI. The value of OFDI stock from developing countries reached $859 billion in 2003, up from $129 billion in 1990, and has increased 11 times since 1985. Though these investments are mainly coming from the BRICS nations, the changing sectoral composition and diversification in destinations reflect increasing technological learning and capacities. Along with the increased levels of FDI, there has been increasing FDI in R&D activities. This is a new feature added, which is likely to hold greater influence on the National Innovation System (NIS) of the countries receiving greater share of the same.

India has emerged as the top destination of R&D investment globally out of the major strategic investments received during 2005. It is also interesting to note that even as percentage of total FDI, the share of R&D during 2002-2007 was 24 per cent and during 2005 the share was 65 per cent as shown in the global strategic FDI in R&D. It does not seem to be merely a coincidence that this region has recently witnessed economic revival and also an increasing share in the Indian Standards Institution.

Source: The New Indian Express http://expressbuzz.com/opinion/op-ed/india-on-global-rd-map/304741.html