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The Debate Zone: Will Asia become the center for innovation in the 21st century?
Asia is using technology to build new models for delivering goods and services to its vast low-income populations. Many of those models will lead to powerful innovations for global markets. The title is America's to lose - and it will if it doesn't enact an innovation policy . The US relies on market forces to spur innovation, but it's starting to lag behind nations that make innovation a national priority with policies that support research and education. Iqbal Z. Quadir
Why Asia can take the lead
Asia is positioned to generate a torrent of new products and services that could make it the global leader in innovation. China and India are fast adopting modern technologies and making great economic strides. South Korea, Taiwan, and Singapore have already leaped forward. Yet all of these countries were among the world’s poorest only a few decades ago. With this momentum, Asia could become the center for innovation in the 21st century.
But that outcome is hardly certain. Asia has much to overcome: the region has adopted innovations primarily from abroad; about 45 percent of its four billion people live on less than $2 a day; the average Asian income is only 40 percent of the world average; other than Japan, successful Asian economies are newly industrialized; and many Asian governments are weakly democratic or nondemocratic.
Yet adversity can foster innovation, and innovations can convert adversity into advantage. Indeed, Asia has been doing just that. The region has generated innovations—defined here as new ways of doing things that have actually been put into practice, not patents or good ideas that haven't—in at least five ways. Each could generate innovations at an even faster pace in the not too distant future.
First, innovations often emerge from existing technologies. Electricity, for instance, was not harnessed originally to facilitate computing or wireless communication, but it led to these transformative innovations. Likewise, Filipinos and Indians are innovating in ways to transfer money through mobile phones, which were originally invented in Western countries for other purposes. Thus, when technologies—no matter where or why they were invented—are applied to diverse contexts, they provide a foundation for previously undreamed-of permutations and combinations.
Second, 1.8 billion people in Asia live on less than $2 a day. Although India is considered an IT powerhouse, more than one billion Indians lack Internet access. However, the self-interest of Asia's considerable commercial entities will compel them to engage vast low-income populations in serious commerce. That will require new products, approaches, and forms of employment and participation. Microcredit and innovative distribution schemes for solar panels, cell phones, and drip irrigation systems in rural communities are examples of ways to engage the traditionally unengaged.
Third, Asia's companies know that by addressing low purchasing power, they can reach vast markets. The lure of these markets is pushing them to search for ways of achieving dramatic savings in energy and materials. Tata's affordable, fuel-efficient Nano automobile, for example, caters to low-income markets, but its impact may extend well beyond them. Admittedly, the environmental effects of the Nano remain to be seen because it will probably translate into more cars on the road and the product itself has yet to mature. However, the thinking behind the Nano and the practical experience that will result from its use could lead to innovations for global markets that increasingly must reckon with climate change.
Fourth, while Asia's late industrialization implies a weakness in fundamental research, it also means that the region is less locked into old infrastructure and legacy technologies and more willing to adopt new ones. For instance, 95 percent of South Korean households have broadband Internet access, while only 60 percent of US households do.
Fifth, though vast amounts of human energy and ingenuity remain dormant beneath Asia's weakly democratic or nondemocratic regimes, this is changing rapidly. Recent events in Iran—whatever their eventual outcome—demonstrate the potential for the Internet, mobile phones, and Twitter to bolster democratic pressures. As democratic forces gather steam and people become more empowered, new entrepreneurial activities and innovations will follow.
These forces of innovation are self-reinforcing, their effects cumulative, and their impact exponential. Together, they can make Asia this century's global center for innovation.
Robert Atkinson America's policy problem
Investment literature warns that “past performance is no guarantee of future results.” This advice should be attached to anything written about the innovation position of the United States vis-à-vis Asia. All too often, defenders of the status quo dismiss Asia’s prospects as an innovation leader because the United States has been the leader for so long—and they assume it will continue to be. But past performance in innovation is no guarantee of future performance, as we have seen with one-time leaders that have lost their advantage, such as Germany and Great Britain. In fact, while the United States once led the world, it no longer does by many measures, and absent significant changes to public policy, it won’t in the future. Asia will.
Already, the United States lags behind other countries in innovation-based competitiveness. The Information Technology and Innovation Foundation (ITIF), which I head, recently published a report called The Atlantic Century. It used 16 indicators to examine the innovation-based competitiveness of 40 nations, including the United States and five Asian nations (China, India, Japan, Singapore, and South Korea). We found that the United States is sixth, not first—behind Singapore, Sweden, Luxemburg, Denmark, and South Korea.
Strikingly, the ITIF found that all of the 39 other countries studied have made faster progress toward an innovation economy over the last decade than the United States has. Dead last is not good either in sports or in innovation-based competitiveness. Among Asian nations, China made the most progress, followed by Singapore (2nd), Japan (10th), India (14th), and South Korea (17th). While the United States ranked 30th in the rate of growth of corporate R&D as a share of GDP, China ranked 4th and South Korea 10th. The United States ranked 29th in growth in the number of scientific researchers as a share of total workers, while China ranked 1st, South Korea 4th, Singapore 5th, and India 10th. If these different rates of improvement continue, as they are likely to, without significant policy changes in the United States the US position will probably continue to fall and Asia’s will likely rise.
One reason many observers maintain their faith in US innovation leadership is that they focus only on the core strength of the United States: its strong market and business environment, which are conducive to innovation. The culture of the United States is more entrepreneurial than that of many nations, including China and Japan. Many US firms continue to be leaders in innovation. But national innovation leadership also depends on having a strong innovation policy system, and on this score the United States is at risk.
Unlike most leading Asian nations—including Japan, South Korea, Singapore, and China—the United States does not have an explicit national innovation policy. Other nations have developed explicit and strategic national innovation policies that, among other factors, include generous tax incentives and direct funding for innovation. In the United States, the continued dominance of neoclassical economics doctrine, which holds that the market will take care of everything, means that efforts to develop similar strategies here are attacked as heavy-handed industrial policy. In fact, the emerging field of innovation economics makes it clear that markets, left to themselves, will underperform with regard to innovation and that they need to be complemented by strategic innovation policies: generous R&D tax credits and capital investment incentives, strong support for science and technology (including efforts to ensure an adequate supply of scientists and engineers), and other related policies. The short answer to the question of whether Asia will lead is that it will do so if the United States lets it by continuing to rely on market forces alone to generate innovation leadership.
Sources : McKinsey
Posted by : HSR ( Oct , 16 2009 )
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BIZ_TALKS SITES HOT NEWS Asia - Center for Innovation ?
BIZ_TALKS SITES HOT NEWS Asia - Center for Innovation ?