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How Tech Innovation Happens: Some Global Exemplars for India
What gives rise to a knowledge economy? And how does it create wealth? There are some common misconceptions, or ideas that are at best partial truths, in relation to this. One such idea is the notion that innovation happens when governments withdraw and allow market forces, as well as a developed system of venture capital and private equity, to blaze away. The latter do have their role to play, but will be ineffective if the government does not do its bit as well. Another way of putting this is that radical innovation and technological breakthroughs do not happen without an element of “industrial policy”, a bad word in some economists’ lexicon. The best example of this is how China, once known for goods manufactured with low-cost industrial labour, has leapfrogged technologically to make, in many sectors, the world’s most sophisticated products. Forced technology transfers, or intellectual property theft, do not tell the whole story. Following the Chinese cultural revolution of the 1960s, when Chairman Mao sent scientists to work cleaning pigsties in Chinese villages, China turned on a dime and invested heavily in science and technology. President Xi Jinping built on this with his “Made in China 2025” programme announced a decade back. The programme is essentially an industrial policy designed to catapult China into pole position in a raft of high-tech sectors. Take electric vehicles or solar cells. It is said that Chinese exports today hinge on “the new three” – electric vehicles, lithium-ion batteries and solar cells – taking the place of “the old three” – clothing, home appliances and furniture. Come 2025, and “Made in China 2025” has largely succeeded in its goals. China now controls an estimated 80% of the global photovoltaic solar cell production supply chain, having managed to cut solar panel prices by 88%
