India, Israel and the U.S. Trilateral collaboration can result in innovation superpower to counter China

Rajesh Uppal January 20, 2022 Geopolitics, Industry Comments Off on India, Israel and the U.S. Trilateral collaboration can result in innovation superpower to counter China 93 Views

The Organization for Economic Co-operation and Development (OECD) defines innovation as, ‘the implementation of a new or significantly improved product or process, a new marketing method, or a new organizational method in business practices, workplace organization or external relations. The impact of innovation on the growth and development of a country is multifold. An innovation economy is one, ‘which experiences sustained growth through the creation and implementation of new technologies, products or processes in an ecosystem of inventors, entrepreneurs and investors.

Mainly, four factors are attributed as contributory in shaping an innovation economy. These include economic incentives, to provide value to an inventor to motivate them to invest in innovation; financial stability; skilled human capital; and accessibility and smooth flow of information. In addition to these, the Government is also required to play a role and provide its support in adopting such public policy that can help in leading the innovation-driven economy

Chinese Growth

China’s economy is destined to be considerably larger than America’s by mid-century, and China now has the second-largest research and development budget in the world for science and technology. China is on its way to becoming a technological superpower, experiencing the fastest sustained expansion by a major economy in history. While Europe and the United States have been the top scientific knowledge producers in terms of quantity and quality for decades, China is now the world’s second in terms of the number of scientific publications.

Innovation is at the top of the country’s priority list. The unparalleled growth is fuelled to a large extent by the innovation and sheer size of tech giants such as Huawei, WeChat, Baidu, and Tencent. Each company has been making great strides in different high-tech sectors.

Behind China’s rapid advancement stands an ambitious plan by the government called Made in China 2025. It aims at turning the country from a low-end goods producer to a high-tech leader by strengthening its industrial capacity while at the same time minimizing its dependency on foreign technologies. To that end, China is targeting 70per cent self-sufficiency in high-tech manufacturing by 2025 and a leading role in global markets by 2049.

Shenzhen has become the Silicon Valley of the East. The city’s population grew from just above 20,000 in 1970 to 10 million in 2020, with an average age of 25. Shenzhen has become a hub that connects innovation, manufacturing, and knowledge. It is no longer famed for making cheap imitations of foreign inventions. Instead, it is considered to be the Silicon Valley of the East. In 2017, China filed about 49,000 applications for international patents, almost half of which came from Shenzhen, surpassing Germany in patent applications and placing fourth in the world, according to the World Intellectual Property Organisation.

China’s research and development personnel pool is the largest in the world and growing rapidly, according to this statistical report by the PRC Ministry of Science and Technology. However, the report also notes that on a per capita basis, China has fewer R&D workers than the West.

Israel Innovation Model

Israel is an entrepreneurial powerhouse and a hotbed for pioneering technologies, profitable business opportunities, and high investment returns. Israel also carefully planned its development in high-tech innovation to attract market leaders from developed countries. Around 250 companies with a global presence have R&D labs in Israel today, which includes Fortune 500 companies and tech giants like Facebook and Apple. For these reasons, it is no surprise that the world’s leading multinational companies have all choose Israel: Microsoft, Motorola, Google, Apple (three R&D centers), Facebook, Berkshire-Hathaway, Intel, HP, Siemens, GE, IBM, Philips, Lucent, AOL, Cisco, Applied Materials, IBM, J&J, EMC, and Toshiba are just some of the names in a long list of over 200 MNCs who realized that Israel is their Ideal investment opportunity. Furthermore, many multinational corporates such as Tata, Kodak, Citi bank, and many others have established innovation centers in Israel.

From the 1990s onward, Israel shifted its economic model to transform into an innovation-based economy. This shift resulted in the economic growth reflecting a GDP growth of 5.9% on an average per year between the years of 1990 and 2000. This growth also affected change in various domains throughout the country, including employment, inventions, etc.

Following the principle of ‘open innovation’, Israel helped startups to be guided by flourishing high-tech companies, thereby encouraging and mentoring entrepreneurs to contribute further to Israel’s economic development. Between a span of 1999 to 2014, Israel has started more than 10,000 companies, and is hence justified in claiming the title of Start-Up nation. Israel is remarkable in that their relatively small population of approximately 9 million people is now competing with highly populated countries like the U.S. and China.

This has also resulted in an exchange of ideas between enterprises, benefiting innovation on a whole and further contributing to Israel’s innovation index. By strengthening its intellectual property protection, Israel has aggrandized the value and utilization of innovations.

India

India’s ambition, as laid out by the Ministry of Electronics and IT, to grow its digital economy to US$ 1 trillion by 2025. By 2025, India could create a digital economy of $800 billion to $1 trillion (or value equivalent to 18 to 23 percent of the country’s nominal GDP). The existing digital ecosystem could contribute up to $500 billion of economic value, but the potential economic value for India could be as much as double that amount — almost $1 trillion— if digital technologies are used to unlock productivity, savings, and efficiency across more
diverse sectors such as agriculture, education, energy, financial services, government services, healthcare, logistics, manufacturing, trade, and transportation.

The potential five-fold increase in economic value from India’s digital transformation by 2025 would create a rapidly growing market for a host of digital services, platforms, applications, content, and solutions. This represents an attractive opportunity for global and local businesses, startups, and platform-based innovators who will be investing in emerging technologies (for example, artificial intelligence, blockchain, drones, and robotics) customised to India’s needs.

Indian Small and Medium Enterprises (SME) sector has emerged as a highly vibrant and dynamic sector of the Indian economy over the last five decades. SMEs not only play crucial role in providing large employment opportunities at comparatively lower capital cost than large industries but also help in industrialization of rural areas. Indian government has been supporting these entrepreneurs and startups under Make in India with initiatives like Innovations for Defence Excellence (iDEX), Start-up India, Atal Innovation Mission (AIM) etc. SMEs do not have exposure to national and international markets, secondary market instruments, technology and product innovations and best global practices.

In a recent survey, 80% of European and US outsourcing firms ranked India as their number one outsourcing destination. US has launched effort to identify and invest in innovative ways to sustain and advance America’s military dominance for the 21st century. US can also tap India’s vast talent pool by strengthening its collaboration with Indian tech firms, entrepreneurs, and start-ups to accelerate it’s innovation and maintain its technological edge. India would also benefit from such collaboration in advanced technologies.