The rise of innovation in China and India — and what it really means for the US

In an interview with strategy+business, Adam Segal, a Senior Fellow for National Security Studies at the Council on Foreign Relations, argues that the threat of China and India out-innovating the US is overstated. The author of recently published Advantage: How American Innovation Can Overcome the Asian Challenge believes that the rise of Asia is more of an opportunity than a threat, and that the US still has a window of opportunity to build on its strengths while China and India are still finding their footing.  Here are some of his thoughts on the three countries:

China

Policymakers and business leaders have been overly focused on measuring what I call the hardware of innovation: the amount of spending on R&D and the number of engineers and scientists, patents, and publications. And whereas the hardware has clearly been built up in China, what I call the software — the political, cultural, and social institutions and understandings that help move ideas from lab to marketplace — are lagging behind. Without the software in place, the whole is much less than the sum of its parts. The Chinese themselves admit that they’ve put a lot in, but they’re not really getting a lot out.

India

We always talk about the Indian Institutes of Technology [IITs] and Indian Institutes of Management [IIMs], both of which have trained some of India’s top business leaders and leading entrepreneurs. But they’re just a small part of a much bigger education system in India, in which the vast majority of universities stress rote memorization, use outdated curricula, and provide no instruction in English. […] Some argue that if you look at Infosys and Wipro and those types of companies, they’ve moved up so far in the value chain that the type of R&D they’re doing for Western companies is increasingly sophisticated and creative, which is, I think, probably true. But those gains aren’t really captured by the Indian economy. It’s still the foreign firms that are capturing the gains.

United States

The traditional model for how the U.S. works in science and technology was like the old energy grid: the U.S. thought of the ideas and then sent them out to the rest of the world, in the same way you generate energy and you send it out. Instead, the U.S. should start to think of itself as a smart grid. The idea of a smart grid is that you can determine where the greatest demand is and have the ability to moderate and change the flow of energy, but also that people can feed energy back into it. […] Increasingly, inventions and ideas will be happening in the places where the U.S. used to just send ideas. And the U.S. has to be able to figure out what those ideas are and how it can apply them to markets and develop them.

Source article:

• The Innovation Advantage (strategy+business)