Economist Special Report: Technology in China and India

The Economist (November 10-16, 2007) has a special report on technology in China and India. It covers a lot of the standard ground. Both countries have rapidly growing economies. However, their growth trajectories are different. China is emphasizing manufacturing and India is developing its software industry. Both countries are emphasizing technology importation rather than invention, albeit in their respective industries. That seems to be counterintuitive in that both countries now have hundreds of research and development laboratories, many owned by international firms.

It seems to me that countries are wise to orient their growth toward the creation of competitive advantage through the use of the unutilized or underutilized resources, which would be expected to be cheep. While they do that which is possible with their current organizational and human resources, making money and building international markets, they can also deepen their technological capabilities. The deeper the technological capacity, the more inventive can be the innovations, and the higher on the value chain the firms can aspire to climb.