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India and the Knowledge Economy - The road to a best selling World Bank report

The most frequently asked question put to the Knowledge for Development (K4D) team is “How can my country request a Knowledge Economy Assessment?” This is how it happened in the case of India, and how it resulted in the publication of a best-selling report, India and the Knowledge Economy: Leveraging Strengths and Opportunities.

Article Overview 

arrowSetting the Right Framework
arrowBringing together Key Stakeholders
arrowValue of Cross-Country Comparisons
arrowDissemination and Impact
arrowContinuous Engagement on the Knowledge Economy agenda

 Setting the Right Framework

As a result of the 1998/99 World Development Report on Knowledge for Development, the topic of the knowledge economy gained prominence with policymakers worldwide. In 2001, the K4D program held a high-level policy forum to share knowledge strategies among key stakeholders from Brazil, India and China--potential knowledge superpowers representing 45 percent of the world’s population.

The timing of the event was nearly perfect. The Indian government was already working on a strategy to transform the country into a knowledge superpower and was keen to cooperate and explore a set of issues that coincided with its own reform agenda. India had gradually been building a knowledge economy, having made great strides in pharmaceuticals, medical sciences, and information technology. This led to increased interest on the part of the government and private sector to look for ways to raise the country’s growth rate.

There was also a growing awareness in India that the knowledge economy means more than having strong IT and high-tech industries. The K4D team proposed an analytical framework consisting of four components: the economic incentive and institutional regime, education, information and communication technologies (ICT), and the innovation system. Effective use of knowledge in any country requires appropriate policies, institutions, investments and coordination across these four pillars.

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Bringing together Key Stakeholders

High-level representatives from key government ministries, the private sector, the academic community, NGOs, and mass media from Brazil, China and India attended a high level policy forum at Wilton Park, UK in 2001. As a result of this forum, and in response to demand from the Chinese government, the K4D program undertook a detailed knowledge economy assessment of China entitled China and the Knowledge Economy: Seizing the 21st Century in 2001. The Planning Commission of the Government of India also produced a report in 2001 on India as a Knowledge Superpower: Strategy for Transformation that focused on IT and biotechnology and  India Vision 2020 in 2002. The President of India, Dr. A. P. J. Abdul Kalam’s 2002 strategy India 2020: A Vision for the New Millennium also stressed the importance of knowledge and ways to facilitate India’s transition to the knowledge economy.

India and the Knowledge Economy will be of interest not only to key stakeholders in India, but also to those interested in the tremendous power of knowledge and innovation as central elements of a country’s development strategy.”
Dr. R.A. Mashelkar, Director General, Council of Scientific and Industrial Research of India.

A strong consensus emerged on the need for an in-depth study on India’s position in the global knowledge economy. This work was included in the Country Assistance Strategy for India, clearly indicating its importance for the Bank’s operational activities in the country.The initiative moved quickly because an ideal mix of stakeholders was at the table. The K4D team, comprising Carl Dahlman and Anuja Utz, led the initiative and provided the analytical know-how. The Finance and Private Sector Development Unit of the South Asia Region of the World Bank financed the work and provided many valuable inputs. Participation by the private sector through the Confederation of Indian Industry (CII), and the inclusion of key representatives from the Government to get consensus on the scope of the study helped to ensure broad buy-in from the outset. Extensive consultations at a K4D workshop in 2004 with high level Indian policymakers, major private sector firms (Infosys, Ranbaxy, Boston Consulting Group, among others), educational institutions, think tanks, and research institutes ensured high quality of the final product. In a related initiative, the Prime Minister of India also set up a National Knowledge Commission in 2005 to leverage various knowledge networks to make India a knowledge engine of the world.

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Value of Cross-Country Comparisons

To illustrate, the report relied on K4D's interactive benchmarking tool--the Knowledge Assessment Methodology (KAM). Below are the KAM scorecards for India and China that demonstrate their performance on key Knowledge Economy indicators for the most recent period for which data is available. The variables are normalized on a scale from zero to ten relative to other 131 countries in the comparison group.

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Note: GDP growth and Patent Applications Granted by the USPTO are the annual averages for 2001-2005 (most recent). Most of the remaining recent data is for 2004-05.

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 Dissemination and Impact

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PdfBook Overview

The book “India and the Knowledge Economy: Leveraging Strengths and Opportunities” was officially launched at the World Bank by the India Country Director in June 2005. It received extensive press coverage globally, as well as locally in India. Interest on the part of multiple stakeholders ensured wide distribution and positive word of mouth. The book rose swiftly on the World Bank’s 2005 best-seller list. The World Bank’s independent Quality Assurance Group also rated the report as “highly satisfactory,” which is the highest ranking that can be given for a Bank product.  

The report assessed India’s enormous asset base: skilled human capital, broad use of English, dynamic private and financial sectors, strong institutions that support  a free market economy, a broad and diversified science and technology infrastructure, and strong global niches in the IT industry. Nevertheless, given the fast pace of change in the global economy and the impressive economic achievements of countries such as China, the report argues that India needs to do more to obtain the full impact of its investments in knowledge-related areas. Reforms of the higher education and innovation systems are of special concern.

“To create a sustained cadre of ‘knowledge workers,’ India needs to make its education system more demand driven,” suggested Anuja Utz, co-author of the report. “This means raising the quality of all higher education institutions, not just a few world-class ones, such as the Indian Institutes of Technology.” Increasing the role of the private sector and promoting university-industry partnerships are some of the possible answers.

India and the Knowledge Economy is a must read for those in government, the private sector, and civil society committed to improving India's future in an increasingly competitive and demanding international environment.”
Arun Maira, Chairman, Boston Consulting Group, India.

“While India is becoming a major global source of research and development (R&D), it remains a relatively closed economy,” noted Carl Dahlman, co-author of the report. “India should increasingly tap into the rapidly growing stock of global knowledge through channels such as foreign direct investment and technology licensing, so that it can catch up to other Asian countries where reforms have moved ahead much more rapidly.”

The report thus took a balanced approach. It gave due credit to India's tremendous achievements in the knowledge domain, while pointing to the challenges the country still faces in further leveraging its strengths and opportunities.

Continuous Engagement on the KE agenda

The K4D team is currently contributing to follow-up work on the innovation pillar led by the Finance and Private Sector Development Unit of the World Bank’s South Asia Region. India should take steps to improve its innovation system not only by applying new knowledge created at home, but also by tapping knowledge from abroad and disseminating it within the country for greater economic and social development.

In sum, India is very well positioned to take advantage of the knowledge revolution to accelerate growth and competitiveness and improve the welfare of its citizens, and should continue to leverage its strengths to become a leader in knowledge creation and use. In the twenty-first century, India will be judged by the extent to which it lays down the appropriate “rules of the game” that will enable it to marshall its human resources, strengths in innovation, and global niches in IT to improve overall economic and social development and transform itself into a knowledge-driven economy.

This note was prepared by Alexey Volynets with contributions from Anuja Utz, Senior Operations Officer, K4D Program, WBI and Carl Dahlman, Professor, Georgetown University. The author also used the findings of the final report issued by the World Bank’s Quality Assurance Group on this work. 

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