Takes more than jugaad

India slips in the global innovation index

For a nation that prides itself on jugaad, the North Indianism for spunky innovativeness and lateral thinking, it can’t be comforting to find it has slipped in the global innovation index. How far India has gone down in the Insead-CII innovation index is difficult to say since this year’s rank of 56 out of 130 countries compares with last year’s 43rd position out of 107 countries — China is also down six places, though at 43rd, it is ranked above India. Equally, it can be no one’s case the index is flawless. The fact that a report on innovation should give equal weights to political stability as it does to protection of intellectual property or to the number of researchers in R&D per million population is surely problematic. Similarly, while the report suggests India’s education system is doing better than China’s, the World Bank’s Knowledge Assessment Methodology (KAM) indicates quite the reverse — indeed, not only does India fare worse than China on the KAM indices, it is one of the few countries that has slipped vis-a-vis itself once the raw results are weighted, as they should be, by the population in the country between now and 1995 when the index was first created. This, of course, should caution researchers not to draw conclusions by comparing across different type of samples.

Keeping these limitations in mind, a few broad points can be made. One, India remains very far behind China not just in terms of the old-style physical infrastructure of roads and power output, the difference is very stark when it comes to the information and communications technology sector — while Insead-CII ranks India and China as 108th and 71st in the world, their World Bank KAM scores are 2.49 and 4.33, respectively. That India should have created the licensing mess it has in the telecom sector, and has already delayed the 3G spectrum auctions by more than a year, can only add to the problem — given how mobile phones outstrip computers so dramatically, future broadband penetration is critically dependent upon the rollout of 3G and Broadband Wireless Access licences. Two, thanks to the much lower levels of R&D spend — India is 36th compared to China’s 23rd rank when it comes to company spending on R&D, and 41st compared to China’s 24th rank for public spending on R&D. India ranks much lower when it comes to patents, labour productivity, value addition or the share of high-tech exports in total exports of the manufacturing sector. India is a resource-deficient economy on a per capita basis. If India’s future GDP growth has to be sustained and India has to overcome this resource deficiency, and given that natural resources are increasingly scarce and global warming so critical, a low innovation score will prove to be a serious handicap. India needs organised effort and adequate investment, both in the public and private sector, to improve productivity of land, labour and capital, and, thereby, its competitiveness. Serendipity or jugaad will not suffice.