EVENTS

Date:	Thursday, February 2, 2006
Time:	3:00 PM -- 4:30 PM
Location:	Wohlstetter Conference Center, Twelfth Floor, AEI 1150 Seventeenth Street, N.W., Washington, D.C. 20036

February 2006

Knowledge and the Growth Process: The Case of India

At a February 2 AEI panel discussion, experts considered how knowledge and innovation have been key to new economic growth and how these dynamics in the modern economy can be a source of conflict between developed and developing nations. Providing the keynote to this conference was Sam Pitroda, chairman of the Knowledge Commission for the Government of India. He discussed the the commission’s plan to focus on market access, innovation, and applications of newly developed technologies and services related to knowledge opportunities in India.

Sam Pitroda
National Knowledge Commission

The government of India recently decided to form the National Knowledge Commission, which I am a member of, to look at the creation of knowledge going into the twenty-first century. The ultimate goal of this commission is to make India more competitive and create prosperity.

Today we have a fairly large base of universities and research and development labs. But we now see a need for this base to be restructured. We want to increase not only the quantity of these institutions, but the quality as well. Six percent of our children coming out of school are going to college; we believe it should be 25 percent. There are peak levels of educational performance, but we need to improve the average.

We decided to focus on five areas of knowledge, the first being access to knowledge. This includes affirmative action programs, libraries, networks, and portals. The second area is knowledge related to education. The key is to examine each of the educational areas of literacy, primary education, secondary education, and vocational training separately and come up with specific recommendations for these categories. The third area of focus includes knowledge creation, science and technology, intellectual property, trade rights, and innovation. The fourth area relates to applications in agriculture, health, and industry. The last area is knowledge related to services that affect the relationship between the government and regular citizens. The goal of this category is to make government more transparent, more accountable, and more accessible. There are many different goals within all five of these categories, and we are not sure how many will be initiated. But the prime minister wanted the commission to be bold and creative, and that is what we did. As these goals are released, we expect to create beneficial debate.
 
With this background on the commission, I would like to address intellectual property and innovation. The innovation scenario has completely changed over the last ten years. Innovations today are happening at a much faster pace than ever before. A multidisciplinary expertise is now required for most innovation. In addition, the nature of the corporation has changed. Take IBM for example. Forty percent of the people at IBM have been there for fewer than four years. What does that mean in terms of corporate loyalty? Is your loyalty to the company, to your manager, or to the subject you are working on? The answer is obscure because contemporary corporate structures have not kept up with the innovation cycle.

Another thing I have noticed is that the brightest talent has been focused on solving the problems of the rich, when the rich have few difficult problems to solve. Poor peoples’ problems, which require much more talent, are not being addressed. Defense research has been a higher priority than developmental research.

In terms of intellectual property, we expect to be a global player and understand that this requires the respect of intellectual property, which is why we are modernizing our patent laws. However, we continue to struggle because the international patent laws are not designed well for developing countries. The costs required for international patents are simply too expensive for the little guy in the developing country to afford. Therefore, it is unreasonable for the developed countries to expect that people in developing countries will be lining up for international patents. I propose that the developed countries establish a global patent regime consisting of one universal patent that is inventor friendly instead of lawyer friendly.

I believe there are a lot of opportunities for bilateral education. The United States is far ahead in higher education. India would like to work with the United States so that we can build our own networks. Even though patents and intellectual property are important, they constitute a very small piece of the overall knowledge puzzle.

Finally, we have the largest young workforce in the world. We must focus on vocational training to enable our young people to meet the strong demand for qualified labor within India. We also need to use technology for connectivity. This means building a broadband infrastructure in place that connects India’s entire population to knowledge. It is time for India to restructure its knowledge institutions to become a global player in the twenty-first century.

Victoria Espinel
United States Trade Representative

I agree that knowledge and innovation are crucial to the modern economy. However, I do not think they necessarily have to be issues of conflict between developed and developing countries. Our goals can be both complimentary and cooperative. The aims of the Knowledge Commission are excellent, and I can assure you that President George W. Bush agrees with many of them. The creation of intellectual property rights is critical to both the U.S. and Indian economies.

The United States agrees completely with Mr. Pitroda that global patent reform is necessary. It is something that we have been working on in both bilateral and multilateral discussions. The United States/India Bilateral Trade Policy Forum was established in November and would be an excellent venue for further discussions. We look forward to strengthening our ties with India and having cooperative discussions on building a strong knowledge economy in India.

Tarun Das
Confederation of Indian Industry

I see some major challenges for Mr. Pitroda and the Knowledge Commission. When we talk about reform, we are talking about something much larger than just opening up the economy. We are talking about reforming a mind-set. The Knowledge Commission must reform much deeper issues in the way that society is organized, which will have a huge spin off effect because of the number of people involved.

The first challenge is to make sure that knowledge is available to all of India’s young people so they can have a productive life and contribute to Indian society. The question is: how do we use modern technology to do this?

Also, the commission must ensure that a fertile environment exists for entrepreneurship. After modernization, the entrepreneurs were intimidated because the economy had such a long history of being strictly controlled. Even though Indian entrepreneurship is finally coming of age, there is still a large group of new Indian entrepreneurs in the pipeline that need a better environment to perform. So, the commission has the daunting task of creating this fertile environment.

The third challenge is to maintain competitiveness within India through the use of new technology. This is not necessarily easy because in any society, there are groups that will resist the changes that come with new technology.

The final two challenges for India are building a partnership with the United States that strives for mutual competitiveness and ensuring that everyone in India can benefit from continued economic growth.

John E. Calfee
AEI

The recent economic changes that have taken place in both China and India--especially in India--have been absolutely astonishing. Mr. Pitroda mentioned the tendency of people to solve the problems of the rich, which I believe gives us a nice segue into the intellectual property issue. Intellectual property rights are essential for solving the problems of India’s whole population.

Let us consider the issue of disease. Death rates related to disease are considerably higher in India than in the United States. One of the problems is that doctors in India are using the same drugs and diagnostics that were used fifty years ago. The lack of intellectual property rights within India has resulted in an environment where there is no incentive for the private sector to solve the problems. This has created a void that international organizations have unsuccessfully tried to fill. The reality is that these problems will not be truly solved until we have a situation where it is possible to make money by solving them. India has taken some positive steps to strengthen its intellectual property rights, but more steps are needed.

AEI intern Paul Stewart prepared this summary.