Viksit Bharat through 'useful knowledge': Building a culture that values it

Last week, Joel Mokyr, Philippe Aghion, and Peter Howitt were honoured with The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. Mr Mokyr has argued that societies flourish when they nurture, develop and spread “useful knowledge”, among other things. Mr Aghion and Mr Howitt explain how such knowledge can be highly productive when it unleashes competition, destruction and regeneration. Together, they elucidate why certain countries continue to grow for very long periods of time. 

Can India learn from the framework of economic progress as described by Mr Mokyr? India’s policymakers have no shortage of economic blueprints. Yet, its per capita income remains a fraction of that of East Asian countries. Economic progress can be measured in a variety of ways, but by all measures, India is growing far below its potential. A lot of progress has been the result of two happy accidents — India’s software industry and massive remittances from non-resident Indians. Decades of haphazard actions have resulted in a mixed picture: Pockets of excellence and a prosperous middle class, alongside poor education and joblessness among the masses and 800 million people on government dole.  

How can India break from the gentle trot of the last 75 years into a gallop? By focusing on what Mr Mokyr calls “useful knowledge” — the ability of a society to generate, connect, and diffuse new ideas that turn into economic progress. Europe’s transformation in the 18th century, he contends, rested on three interlocking institutions: The generation of propositional knowledge (science and theory), its translation into prescriptive knowledge (techniques and engineering), and a network that allowed ideas to circulate freely between the two.  

Modern China has built its own version of this at a breathtaking pace. Its research & development (R&D) spending is above 2.5 per cent of its gross domestic product (GDP), its patent filings outnumber those of any other country, and its universities churn out hundreds of thousands of engineers and scientists each year. Behind these statistics lies something deeper: A dense network connecting research institutes and industrial clusters of supply chains. The system is far from the liberal, open model Mr Mokyr has celebrated in his work, but it functions in the same way — continuously generating and applying “useful knowledge”.  For example, it is widely known that in China flying cars are now beginning to take off and drone deliveries are becoming more common. What is less known is that this year alone, six universities have established degree courses in “low-altitude technology and engineering”. In parallel, a complete and tightly knit supply chain is coming into being, which will help this sub-sector scale up fast.  

India’s scientific elite is world-class, yet the bridge between laboratory and factory floor remains rickety. The country spends barely 0.7 per cent of its GDP on R&D — about one-quarter of China’s share — and most of it comes from the public sector. Indian universities are strong in teaching but weak in research, and industry prefers to import technology rather than adapt or develop it, and collaboration between the two remains sporadic. The result is an economy rich in human talent but poor in cumulative technical capability. Applying Mr Mokyr’s framework to India means recognising that economic growth at its heart is a knowledge system. The task is to build institutions that expand the stock of “useful knowledge” and accelerate the speed at which it circulates between teaching and building (this includes using the fresh knowledge gained from building to teach better) — in other words, a growing and improving stock of useful, codified and teachable knowledge. Such knowledge is especially transformative when it addresses pressing needs such as clean energy, urban transport, waste recycling, water management, and affordable health care.  

For this, India has to enlarge the supply of propositional and technical knowledge and invest far more heavily in science and engineering education, including a broad network of technical universities and polytechnics. The government’s recent move to modernise industrial training institutes through public-private partnerships (PPPs) is a step in this direction. In 2022 (latest data), 36 per cent of all Chinese undergraduate entrants picked an engineering degree. In the United Kingdom and the United States, the proportion hovers around 5 per cent. In 2025, India produced as many graduates in science, technology, engineering, and mathematics (STEM) as China, but most of them want to get into software services. We have far fewer numbers in the postgraduate and doctoral levels, where original research takes place.  

Equally crucial is to strengthen incentives for private R&D. At present, large Indian companies devote only 0.2-0.3 per cent of sales to research, far below global norms. A combination of tax incentives, targeted procurement and PPPs could change that. The Defence Research and Development Organisation and the Indian Space Research Organisation have shown how public missions can spawn ecosystems of suppliers and engineers — the challenge is to replicate that model in civilian industries.  

Mr Mokyr’s second requirement is connections, linking science to practice. India’s innovation system is still too compartmentalised. Academic research is rarely commercialised; industrial clusters often operate without research institutions nearby. A more integrated model would pair universities with regional manufacturing hubs, promote joint appointments for scientists and engineers, and create funding schemes that require collaboration between academia and industry. China’s network of university-linked science parks and Germany’s Fraunhofer institutes offer instructive examples.  

In the 19th century, British economist Alfred Marshall described economic progress as “knowledge growing within knowledge”. That phrase captures Mr Mokyr’s insight and India’s predicament. The country has the talent, the entrepreneurial energy, and the domestic market size to grow rapidly (as Chinese President Xi Jinping says: “Advantage of large-country economies is the internal circulation that is possible”). What it lacks is a system that lets knowledge accumulate upon itself. How to achieve this? In practical terms it calls for a lot of unglamorous grunt work, which includes building institutions, incentives, and feedback mechanisms to continually refine the outcomes, as well as documentation, replication, and dissemination. This would be impossible without a culture that respects and celebrates useful knowledge. Quite a tall order. 

 

The writer is editor of www.moneylife.in and a  trustee of the Moneylife Foundation; @Moneylifers