The Internationalization of Corporate R&D

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THE INTERNATIONALIZATION OF CORPORATE R&Dputer and Internet user penetration. ICT diffusion, however, has risen quickly, as demonstratedby the rise in the number of Internet users from less than one million in 2000to over 50 million in 2006. This number is projected to reach over 80 million by 2010(NASSCOM 2006 and Internetworldstats 2006).A wide range of indicators point to India’s potential for catching up. The country’sadult literacy rate for has risen from 58 percent for men and 31 percent for women in1985, to 68 percent for men and 45 percent for women in 2000 (World Bank 2006).Moreover, the numbers of engineering students graduated annually have risen fromabout 44,000 in 1992 to approximately 184,000 in 2004 (NASSCOM 2006) comparedto 352,000 for China (China Statistics Yearbook 2004) and 76,000 for the U.S.(Morgan Stanley 2005). The ratio of Indian population living below the poverty line, asmeasured by the National Institute of Rural Development, has decreased from 55 percentin 1973–74 to 26 percent in 1999–2000.The Indian economy is expected to grow at a rapid rate of 6–9 percent between 2006and 2010 and beyond. By the year 2032, China will have the world’s largest economy(in terms of GDP at market prices), followed by the U.S. and India, according to amuch publicized scenarios presented in the BRIC report released by Goldman Sachs(Goldman Sachs 2003). In terms of purchasing power parity (PPP), India’s GDP isalready the third largest in the world after the U.S. and China. While much of thecountry is likely to remain poor and industrially backward, other parts have the potentialto grow as fast as China or other East Asian economies. Some urban areas areincreasingly integrated in the new global knowledge-based economy as demonstratedby the cases of Bangalore, Chennai, Delhi, Hyderabad, Kolkata, Mumbai and Pune.To understand the prospects for India to become a major economic and technologicalpower, a long-term perspective is required, including an assessment of the country’scurrent global position in economic, social and technology development, a review ofhistorical phases of change, and the evolution of government policies.Higher Education, R&D Institutions and Access to Information NetworksThe principal factors contributing to India’s chances of becoming a major global R&Dpower are the size of its educated workforce, entrepreneurial traditions and a significantexisting R&D-related institutional infrastructure. India’s education and research systemis diverse and ranges from internationally competitive institutions to those with inferiorperformance. The country’s pool of young university graduates (those with seven yearsor less of work experience) is estimated at 14 million. This is 1.5 times the size ofChina’s, almost twice that of the U.S., and topped up by 2.5 million new graduatesevery year (Farrell et al. 2005). The number of highly qualified engineering MastersandPh.D-level researchers is however not so large if compared to major industrialnations. India produces about 6,000 Ph.Ds annually. The IT and IT-enabled services270
THE INTERNATIONALIZATION OF CORPORATE R&Dsector had led the growth in technical human resource demand. The number of professionalsemployed in the IT and IT-enabled services industry has grown from 51,000 in1990 to about 1.3 million in 2006 (NASSCOM 2006). As of 2006, India and Chinaboth had larger stocks of educated human resources, including engineers and number ofnew science graduates, than any other countries in the world (Mitra 2006b). India hasinvested much in expanding its higher education and R&D institutions since the 1950s.From the 1990s these efforts have begun to yield major payoff as illustrated by thehigh-tech industry developments in India and the role of the Indian Diaspora in, forexample, Canada, U.K. and the U.S.These types of observations must however be critically evaluated and put in a longtermdevelopment perspective. On a per capita basis, the number of people with highereducation in India, including engineers and scientists, is still very low compared tomajor industrial economies and countries such as Poland, Brazil, China and Russia.This points to a major scope increase in the number of people with higher education.India indeed has a key advantage in the absolute number of persons with higher education.In addition, the number of people with relevant higher education, training andprofessional experience is increasing exponentially.The number of people with higher education has increased significantly but there are majoroutstanding issues in the relevance and quality of education and training programs. Onlybetween 10 to 25 percent of India’s graduates are considered suitable for employment bymultinational corporations (Farrell et al. 2005). In addition, there is considerable room forimprovement to ensure that those with relevant higher education, talent and professionalexperience are employed in ways such that their abilities are effectively utilized.The government has traditionally had the major role in education and R&D institutionalcapability building. It has given priority to the provision of free higher education and theestablishment of a large number of research institutions within the public sector. The effectivenessof these efforts has been mixed, but improved in the 2000s. Furthermore, privateinstitutions have begun to play a more significant role in higher education, training andresearch since the 1990s. This is illustrated by the rapid growth in education and training,especially in software and IT-enabled services, and business administration.Despite substantial public spending on universities and R&D labs, India’s library facilitiesare generally poor by international standards. However, the Internet has opened access todata, information and knowledge, and facilitated global networking among academic andcorporate groups. This increased level of access has led to a major scope-shift for India (andother less developed areas), to now play a more prominent role in R&D.271
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ITPS, Swedish Institute For Growth
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The Swedish Institute for Growth Po
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