A professor of international business and economics at Georgetown University’s McDonough School of Business in USA, Stanley D Nollen visits India four times a year.
He studies firms and industries in emerging market economies. His recently published research is about software and hardware industries in India and China. Excerpts from an exclusive chat with Express:
Express: What are the key leverage areas India should work on to compete with China?
Nollen: Both nations have a large number of technical ly educated young people. However, India has the advantage of the English language along with an entrepreneurial spirit that goes along with its education and training. Also, India’s familiarity with Western business practices and legal systems makes India accessible to the West. Culturally, however, India is not so accessible. These are gaps that require Westerners to learn and overcome. But a large pool of young educated and a considerably stable democratic system is the basis for competing with China.
If India has the required manpower, where are we going wrong?
I don’t know if I would ask that question that way. India is, for many years, growing slower and more steadily than its neighbours just like the hare and tortoise fable. I am not a political economist, but I don’t see any looming, insoluble economic, social or political problems in India. I would have some concerns about that in China, however. The basic political economy is sound. Of course, you want a high growth rate to raise people out of poverty faster, but I shouldn’t be in such a hurry as ‘steady and strong’ is good. There are economic problems to fix, but if you go around the landscape, India’s micro economic situation is not worse than Eurozone. China appears better off, but its portrait of the future is a bit more threatening.
Is the low level of R&D a policy problem in India?
Yes, it is. R&D is conducted by private firms and public research institutes. If the total spend on R&D is lower than competitors, it will have adverse implications. India has needs for so much government expenditure, like basic infrastructure. There is a question of how to allocate scarce resources. I think there is a realisation now that it is okay to grant long-lived product and process patents. R&D spending in the software industry is increasing, and the same may happen in other industries.
In emerging economies, is it a question of innovation versus entrepreneurship?
Entrepreneurs are innovators, but it needn’t be vice versa. India has an entrepreneurial history and so does China. But innovation does not depend on entrepreneurship. It depends on talents and needs, both from demand and supply side. The Central government can create market conditions.
