'India, China will lead the world with innovations'

By siliconindia   |   Wednesday, 24 September 2008, 23:15 IST
Printer Print Email Email
Boston: Rising economic powers India and China have been surprising the world by their quickest economic growth and other achievements. These two Asian nations hold tremendous potential as centers of innovation - a fact that has escaped the attention of the rest of the world, says Ravi Ramamurti, Director of the Center for Emerging Markets at Northeastern University's College of Business Administration. A report Indus Business Journal cited him saying, "China and India are already well-recognized as centers of production of low-cost goods and services for the world. But their potential as centers of research and development and innovation is only starting to be recognized. They will fuel global innovation in at least four ways." Though India and China already are centers of innovation, they were known for making cheap-priced goods. Many Westerners still perceive India as a global hub for services like information technology, and China as a low-cost producer of consumer goods that ultimately wind up on store shelves in the United States. But the stage is set to do away with this impression, he adds. According to Ramamurti, the rise of India and China as hubs for research-and-development activities will drive innovation in other parts of the world in the following four ways: Firstly, Western companies already recognize that both countries have an abundant supply of highly skilled, low-cost workers. And American firms, in particular, are eager to establish research-and-development operations in India and China in order to access this talent. A huge talent pool in India will help accelerate product development by these firms. Secondly, India and China will fuel a new kind of innovation aimed at adapting existing Western technologies and products for low-income customers, an approach that Ramamurti calls "affordability innovation". These countries will also produce new business models catering to their middle-class citizens. Local companies are likely to lead this process because they are uninhibited by prior investments in technology and organization, as Western firms are. A great example of this is the Indian telecom firm, Bharti Airtel, which made huge profits despite charging one to two cents per minute for wireless calls. Finally, the two countries will contribute new products and services, based on cutting-edge technologies, to the world market.