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India's National Innovation System: Key elements and corporate perspectives

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  • Herstatt, Cornelius
  • Tiwari, Rajnish
  • Buse, Stephan

Abstract

In recent years India has emerged as a major destination for corporate research and development (R&D), especially for multinational corporations. India's domestic institutions like Indian Space Research Organisation (ISRO), Defence Research and Development Organisation (DRDO), and the Centre for Development of Advanced Computing (C-DAC) have set prestigious milestones of international standards. Not surprisingly, at Governmental levels a number of international cooperation agreements in the field of science and technology have been signed with India. After years of self-imposed seclusion, principally motivated by post-colonial India's insistence on the development of indigenous technology, India finally seems to have joined the global mainstream of innovation. India is in the process of emerging as a major R&D hub for both large and medium-sized multinational companies in various industries. This development is mainly owing to the availability of skilled labor produced in world-class elite institutions. Cost advantages, e.g. in the form of low wages are still present but receding due to substantial wage hikes often ranging between 15 and 25% per annum. The striking finding is however about market-driven factors. Of late, India's market potential, in the meantime ranked as 3rd largest worldwide by the Global Competitiveness Report 2007-08, has emerged as a crucial driver. Rising income levels of India's billion-plus population are creating unique market opportunities for firms, both domestic and foreign. In India the Government has historically played a major and in most cases a singularly positive role in the formation of its innovation system. India, ever since its independence from British rule, has invested much time, resources and efforts in creating a knowledge society and building institutions of research and higher institutions. Despite explosive population growth literacy rate in India grew from 18.3% in 1950-51 to 64.8% in 2001 thanks to concerted Government efforts; female literacy rose from a mere 8.9% to 53.7% in the same period. Moreover the quality of education in India is generally ranked as very good. According to the Global Competitiveness Report 2007-08 the quality of mathematics and science education in India is ranked as 11th best in the world, much ahead of 29th placed Japan, 36th placed Germany, 45th placed United States and 46th placed United Kingdom. Nevertheless, India is faced with major challenges related to infrastructure and bureaucratic hurdles. The quality of education, notwithstanding such excellent rankings as stated above, in many institutions does not reach the standards required for (cutting-edge) R&D efforts. Moreover, a booming economy is leading to shortage of qualified and experienced skilled labor - which result in inflationary wage growth and high attrition rates, which generally lay in a double-digit range. With the Government maintaining a pro-active role many of these problems may however be expected to get resolved to a manageable extent. In its Eleventh Five Year Plan (2007-12) the Government has announced massive investments in infrastructure and education sectors to enhance both the quantity and the quality. Industrial firms in India have recognized their chances and are investing heavily in R&D capacities. India is also a beneficiary of global mobility and exchange of talents, technology and resources as much as the world, especially the developed Western countries, have profited from India's export of brain power. In sum all these developments raise hopes for a further improvement in the conditions of Indi's National Innovation System. --

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Bibliographic Info

Paper provided by Hamburg University of Technology (TUHH), Institute for Technology and Innovation Management in its series Working Papers with number 51.

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Date of creation: 2008
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Handle: RePEc:zbw:tuhtim:51

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Keywords: National Innovation System; India; Offshoring; Globalization; Research and Development;

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References

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  1. Michael Kremer & Nazmul Chaudhury & F. Halsey Rogers & Karthik Muralidharan & Jeffrey Hammer, 2005. "Teacher Absence in India: A Snapshot," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 658-667, 04/05.
  2. Cornelius Herstatt & Rajnish Tiwari & Dieter Ernst, 2008. "India's National Innovation System: Key Elements and Corporate Perspectives," Economics Study Area Working Papers 96, East-West Center, Economics Study Area.
  3. Singh, Lakhwinder, 2006. "Globalization, national innovation systems and response of public policy," MPRA Paper 641, University Library of Munich, Germany.
  4. Nazmul Chaudhury & Jeffrey Hammer & Michael Kremer & Karthik Muralidharan & F. Halsey Rogers, 2006. "Missing in Action: Teacher and Health Worker Absence in Developing Countries," Journal of Economic Perspectives, American Economic Association, vol. 20(1), pages 91-116, Winter.
  5. André Nassif, 2007. "National Innovation System And Macroeconomic Policies: Brazil And India In Comparative Perspective," UNCTAD Discussion Papers 184, United Nations Conference on Trade and Development.
  6. Sunil Mani, 2008. "The Sectoral System of Innovation of Indian Pharmaceutical Industry," Working Papers id:1523, eSocialSciences.
  7. Tiwari, Rajnish & Buse, Stephan, 2007. "Barriers to innovation in SMEs: Can the internationalization of R&D mitigate their effects?," Working Papers 50, Hamburg University of Technology (TUHH), Institute for Technology and Innovation Management.
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Citations

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Cited by:
  1. Herstatt, Cornelius & Tiwari, Rajnish & Buse, Stephan, 2008. "India's National Innovation System: Key elements and corporate perspectives," Working Papers 51, Hamburg University of Technology (TUHH), Institute for Technology and Innovation Management.
  2. Tiwari, Rajnish & Herstatt, Cornelius, 2009. "The emergence of Indian multinationals: An empirical study of motives, status-quo and trends of Indian investments in Germany," Working Papers 56, Hamburg University of Technology (TUHH), Institute for Technology and Innovation Management.
  3. Tiwari, Rajnish & Herstatt, Cornelius, 2012. "Open global innovation networks as enablers of frugal innovation: propositions based on evidence from India," Working Papers 72, Hamburg University of Technology (TUHH), Institute for Technology and Innovation Management.
  4. Narula, Rajneesh & Prasad Kodiyat, Tiju, 2013. "The growth of outward FDI and the competitiveness of the underlying economy: the case of India," MERIT Working Papers 042, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  5. Tiwari, Rajnish & Herstatt, Cornelius, 2012. "India - a lead market for frugal innovations? Extending the lead market theory to emerging economies," Working Papers 67, Hamburg University of Technology (TUHH), Institute for Technology and Innovation Management.
  6. Tiwari, Rajnish & Herstatt, Cornelius, 2011. "Lead market factors for global innovation: Emerging evidence from India," Working Papers 61, Hamburg University of Technology (TUHH), Institute for Technology and Innovation Management.
  7. Tiwari, Rajnish & Herstatt, Cornelius, 2012. "Frugal innovations for the 'unserved' customer: An assessment of India's attractiveness as a lead Market for cost-effective products," Working Papers 69, Hamburg University of Technology (TUHH), Institute for Technology and Innovation Management.

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