- The optics said everything. The India-US relationship has taken a new turn, as evidenced by Prime Minister Narendra Modi’s recent highly successful visit to New York. The overwhelming response from the Joe Biden administration in extending a warm invitation to three days of meticulously planned interactions speaks volumes about the importance the administration places on India and its current leadership. PM Modi’s first state visit and second joint address to Congress received widespread attention. Several engagements with major business houses and technology firms also demonstrated how foreign players view India’s potential in the coming years. It bodes well for the country.
PC: AP
- To be sure, India has grown admirably over the years in line with an aspirational society that wishes to be counted among the best. Similarly, despite several challenges, India’s economic size has grown primarily through the addition of physical capital. However, there is a school of thought among the astute that intellectual capital, like physical capital, requires a significant boost. It is worth noting that one of the highlights of the current phase of India-US engagement is the exchange of high-tech information. This applies to both military and civilian domains, where there is frequent overlap. If it lives up to its potential, this exchange could help India quickly climb the scientific and technological ladder.
- Knowledge spillovers are required for this to occur. In other words, knowledge must spread far beyond the domain in which the two parties are engaged. This is possible with careful planning. Consider what China did in the late 1980s with Science Park. It made room not only for high-tech foreign and domestic firms but also for dozens of universities. It was created to aid in the spread of knowledge to a broader range of businesses. Needless to say, India requires a policy approach that fosters such ecosystems. R&D is one channel that can help with this process. For the world’s fifth-largest economy, India’s track record in this area is unimpressive. Furthermore, Niti Aayog compared R&D spending across countries.
PC: BW Online Bureau
- Our spending amounts to about 0.7% of GDP, whereas most technologically advanced countries spend more than 2% of GDP. In Israel, it accounts for nearly 5% of GDP. Another data point demonstrates that India’s economic output is not heavily reliant on intellectual capital. The World Intellectual Property Organization’s database ranks countries based on the number of domestic patent applications per $100 billion of GDP. In 2021, India ranked 25th, with South Korea, China, and Japan taking the top three spots. One reason for India’s underwhelming performance in this area is that private sector R&D is relatively low when compared to other market-based economies. As a result, more needs to be done to increase intellectual capital. Hopefully, the newly found friendship between the United States and India will address this issue.
