Are Indian Companies Failing in Innovation?

Mumbai: Surprisingly, not even a single Indian company managed to get the country on Bloomberg’s Innovation Index list of the top 50 most innovative countries in the world, 2015. The list has been comprehensively dominated by South Korea, Japan and Germany. At positions 48, 49 and 50 are Argentina, South Africa and Morocco, respectively. However, many business news readers, including DivyaBhaskar readers, may argue that innovation is not measurable.

In order to set the ranking, the poll takes into consideration six tangible activities that are key to innovation. However, the intention of such a ranking is not to provide countries with bragging rights, but to see what formula drives innovation, and what governments and companies can do to replicate it.

Research & Development

The number one country in the research and development category is South Korea. This proves that countries can improve themselves through the combination of private enterprise and government support. In 1957, South Korea’s GDP per capita was the same as that of Ghana. However, R&D is stifled when kept hidden in laboratories like in France where scientists receive little incentive to commercialize their efforts. In leading countries in R&D, the government takes an active role by offering research grants to companies and university labs. South Korea’s economy has been fueled largely by research intensive firms like Samsung.

Manufacturing

An important component of innovation is manufacturing, i.e. the value added to a product by manufacturing that boosts ranking of countries with a focus on computers, autos and pharmaceuticals. Switzerland leads in this category, while China is at 41. Although manufacturing is a major sector, most of the output is low-tech and the population in China dilates the per-capita figure.

Hi-Tech

This category is not adjustable to meet a country’s economy size or population.

It’s, therefore, no surprise that the United States is ahead of the other countries, which boosts its ranking overall. The sheer innovative power of America’s hi-tech is obvious ranging from Monsanto to Lockheed Martin to Google.

Post-Secondary Education

In this category, the education level of the country’s workforce is measured four different ways. South Korea leads this category while Brazil, Indonesia, Kenya and Pakistan rank lowest, as they struggle to achieve the minimum levels of universal education. However, education is not necessary for innovation. Russia, for example, excels in math and science, but innovation is not one of its strengths.

Research Personnel Force

Finland leads in this category due to their diversification into engineering after the devastating fall from grace of Nokia. It is also observable that smaller countries tend to carve out some sort of niche. For example, Denmark is a leader in pharmaceuticals, Singapore in electronics, Iceland in genomics, and Israel in software. For less developed countries, innovation is adopting and adapting technologies from elsewhere to meet their requirements.

Patents

Patents protect and encourage inventiveness, but can be used as weapons to limit innovation by preventing individuals from developing upon the existing technology. Countries with lots of patents are, commonly, science and technology frontiers. South Korea is again first in this category.

The best antidote to stagnation is innovation through creating products and services that make life better. India should foster a culture of innovation, but it’s not easy to achieve this. This is achievable through the magic and love for entrepreneurship and experimentation!

Posted by on January 12, 2016. Filed under Economy, Editorial. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.