{"id":242980,"date":"2023-05-18T20:04:28","date_gmt":"2023-05-18T14:34:28","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=242980"},"modified":"2023-05-18T20:04:28","modified_gmt":"2023-05-18T14:34:28","slug":"towards-a-national-innovation-system","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/towards-a-national-innovation-system\/","title":{"rendered":"Towards a National Innovation System"},"content":{"rendered":"\n

Source<\/strong>: The post is based on the article\u00a0\u201c<\/strong>Towards a National Innovation System<\/strong>\u201d published in Business Standard <\/strong>on\u00a018th<\/sup> May 2023<\/strong>.<\/p>\n

Syllabus: GS 3 \u2013 Indian Economy – <\/strong>Growth & Development<\/strong><\/p>\n

News<\/strong>: Economists, focusing on the National Innovation System, believe that innovation largely happens at firms. Firm capacity is affected by both what they do themselves and the institutions around them.<\/p>\n

What is the present situation of India in innovating its firm?<\/strong><\/h2>\n

The top 2,500 firms investing in R&D worldwide account for around 90 percent of all industrial R&D. However, India has no firms in the top 2,500.<\/strong><\/p>\n

Even when Indian software companies are profitable, they invest just 1 percent of their average annual revenue in R&D,<\/strong> compared to a global average of 12 percent.<\/p>\n

Therefore, India should increase its in-house R&D from 0.3 percent of GDP to match the world\u2019s level of 1.5 percent.<\/strong> India also needs big R&D investors.<\/p>\n

Where could big R&D investors in India come from?<\/strong><\/h2>\n

India\u2019s 10 most profitable non-financial firms are in software, oil refining, metals, and other industries.<\/p>\n

They invested under $1 billion, or about 2 percent of profit, in R&D.\u00a0However, companies in China invested around 29 percent of profit while companies in the US, Japan and Germany invested 37, 43 and 55 percent of profit in R&D.<\/strong><\/p>\n

Therefore, Indian industry should be present more in technology-intensive sectors to invest more in R&D. <\/strong>Within the industries that are already present in India, it is required that they invest closer to the world average.<\/p>\n

These measures will then bring giant investors in R&D among the most profitable firms.<\/p>\n

What can India learn from the world in firm innovation?<\/strong><\/h2>\n

Japan, South Korea, Taiwan, Singapore, and China<\/strong> followed a particular sequence in building innovation capacity.<\/p>\n

Firms in these countries first entered export markets as original equipment manufacturers (OEMs) supplying to foreign brands<\/strong>. This ensured world-scale capacity and brought competitiveness amongst the companies.<\/p>\n

Later firms in these countries moved up the value chain to more technology-intensive sectors such as<\/strong> consumer durables, electronic assembly, etc. They also started to invest in in-house R&D in these sectors to sustain competitiveness.<\/p>\n

These firms further moved to higher-technology sectors like semiconductors, pharmaceuticals, <\/strong>computers and went with increasing investments in in-house R&D.<\/p>\n

All five East Asian governments funded R&D and followed the West in investing in public research in the higher education system to create researchers.<\/p>\n

These researchers became the core of the in-house R&D departments of local firms.<\/p>\n

In contrast, Indian Industry was forced to compete only after 1991 liberalisation, which was the first step of innovation in India.<\/strong><\/p>\n

The other steps in innovation have not yet happened in India as the Indian industry has been content with low R&D spending of 0.3 percent of GDP.<\/p>\n

What can be the way ahead for India?<\/strong><\/p>\n

Pharmaceuticals and automobiles are the two technology-intensive sectors in which India has some presence in the global industrial R&D.<\/strong><\/p>\n

Pharmaceuticals dominate the R&D investments in India. It accounts for 34 percent of all Indian industrial R&D.<\/p>\n

With this investment in R&D its sales account for 10 percent, which is lower than the world\u2019s 16 percent. However, this ratio is decent relative to every other sector.<\/p>\n

Therefore, India has an advantage in pharmaceuticals to build a world-class innovative industry.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Source: The post is based on the article\u00a0\u201cTowards a National Innovation System\u201d published in Business Standard on\u00a018th May 2023. Syllabus: GS 3 \u2013 Indian Economy – Growth & Development News: Economists, focusing on the National Innovation System, believe that innovation largely happens at firms. Firm capacity is affected by both what they do themselves and… Continue reading Towards a National Innovation System<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[10503,216],"class_list":["post-242980","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-business-standard","tag-gs-paper-3","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1701496390},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/242980","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=242980"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/242980\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=242980"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=242980"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=242980"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}