Transcript The Knowledge Revolution and the Need to Develop Country

China and India as Emerging
Technological Powers
Carl Dahlman
Georgetown University
V Knowledge Economy Forum Prague
March 28-30, 2006
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Share of Global GDP
A Two Millennium Perspective
Share of Global GDP (1990 Internatinal $)
40%
35%
India
30%
China
United States
25%
20%
15%
Western Europe
10%
5%
Japan
0%
0
200
400
(Madison 2000, WDI 2005)
600
800 1000 1500 1600 1700 1820 1870 1913 1950 1973 1998 2000 2003
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World GDP PPP Share for different regions
(1980-2003)
World GDP PPP (constant 2000 International $) Share (%)
30.00
High income: OECD ex. US & Japan
United States
25.00
20.00
East Asia & Pacific
15.00
Europe & Central Asia
Latin American & Caribbean
Japan
Sub-Saharan Africa
10.00
South Asia
5.00
Middle East & North Africa
0.00
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
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Global View: Knowledge Economy Index
(un-weighted)
©Knowledge for Development, WBI
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Relative Size 15 Largest Economies 2003
Ave RGDP per capita growth
1991-2003 (%)
Real GDP 2003 (Trillions of 1995 international $)
China
$5.60t
8
6
Germany
$1.98t
4
India
$2.69t
Japan
3.12t
United Kingdom
$1.40t
Canada
$0.84t
2
Brazil
$1.19t
United States
$9.45t
Italy
$1.36t
Mexico
$0.81t
0
0
5,000
10,000
15,000
20,000
25,000
Russian Federation
$1.15t
30,000
35,000
France
$1.42t
-2
Real GDP per capita (constant 1995 international $) 2003
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Trillions of 1995
international $
16
Real GDP (PPP): Projections 2004-2015 (Using 1991-2003 Average Growth Rates)
India
Canada
Italy
Russian Federation
14
China
France
Japan
United Kingdom
Brazil
Germany
Mexico
United States
China
United States
12
10
India
France
8
Italy
Brazil
United
Kingdom
Russian
Federation
Mexico
Germany
6
Japan
Canada
4
2
0
2003
2005
2007
2009
2011
2013
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2015
China India Most Recent
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Comparisons 1995 to Most Recent
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China India Innovation Pillar
Scientists & Engineers in R&D
Scientific &Technical Publications
Patents in US
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Global R&D Effort in Comparative Perspective
(Data for 2002)
Source: World Bank SIMA Database
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China India Innovation System
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China India Education
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Share of Global Merchandise Exports
1980-2004 (percentage)
14.00
United States
12.00
Germany
10.00
8.00
China
Japan
Netherlands
Italy
France
United Kingdom
Canada
6.00
4.00
2.00
04
20
03
20
02
20
01
20
00
20
99
19
98
19
97
19
96
19
95
19
94
19
93
19
92
19
91
19
90
19
89
19
88
19
87
19
86
19
85
19
84
19
83
19
82
19
81
19
19
80
0.00
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Source: WTO Database, 2005
China--Strengths
Very high economic growth, large internal market
Very high savings and investment rate
Excellent at tapping into global knowledge through
direct foreign investment and Chinese Diaspora
Becoming world’s manufacturing base
Very large supply of excess labor will continue to give
it low wage advantage
But moving rapidly up value chain from labor
intensive to more technology intensive exports
Efficient export trade logistics
Critical mass in R&D is beginning to be deployed to
increase competitiveness
Strong investments in education and training
Government with strong sense of national purpose
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China -- Lessons
Importance of nation state in
developing long term strategy for country,
providing stable macroeconomic framework,
pragmatism in transition to market economy
developing an institutional means for development to take
place
focusing for several decades on the importance of education
and science and technology
Importance of integration to world economy and of
trade in goods as engine of growth
Very effective use of direct foreign investment to
move up technology ladder
Strong investments in human capital as fundamental
step to make the transition
Effective use of Chinese Diaspora in high tech parks
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and to bring in technology and access to markets
India -- Strengths
Jumped from traditional rate of 2-3% growth in past decades to
6-8% last decade
Strong science and engineering capabilities centered in chemical
and software areas
Is becoming worlds service center for software development
and back office offshore outsourcing
Is also becoming center for contract innovation work for
multinational companies
Has large critical mass of educated, skilled, and English
speaking knowledge workers and can increase this stock
Has network of successful Indians in US and Europe providing
links to markets, technology, and finance
Relatively deep financial markets
Is strengthening export orientation, and seeking strategic
alliances, but strength is limited more to intangible trade rather
than tangibles trade because of high infrastructure and
regulatory costs
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India -- Lessons
Importance of investments in high level technical,
scientific, and managerial capital through network of
Indian Institutes of Technology and Indian
Management Institutes
Importance of turning brain drain to brain gain by
harnessing Indian Diaspora in global high tech
industry
Importance of moving from self-reliance to greater
international integration to accelerate and sustain
growth
Importance of improving the whole legal and
regulatory environment to stimulate greater
innovation and get more out of growing critical mass
of resources allocated to R&D
Importance of tackling necessary reforms in
regulatory regime and improving infrastructure and
education to really emerge as major export power
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Conclusions
Globalization increasing; global competition intensifying
World Moving toward three economic blocks-US, EC, and Asia
Asian Block rising in economic importance
East Asia, and within East Asia, China’s entry into world stage
unprecedented in speed, scope, and scale
India on threshold of becoming another global economic power
Both have critical mass in education and innovation capability
which they are beginning to deploy very effectively
Key lesson from China is how aggressively and effectively it has
become major global player by making effective use of global
knowledge and trade, plus investment in education
Countries in ECA region will face increasing pressure to
Upgrade broad economic incentive and institutional regime and
participate more actively in global system
Strengthen formal education and life long learning to be able to
constantly restructure and compete
Effectively tap global knowledge and combine it with domestic
innovation efforts to raise productivity and competitveness
Align themselves as part of global value chains
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Annex
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Benchmarking Countries in the Knowledge Economy:
The Knowledge Assessment Methodology
KAM: 80 structural/qualitative variables to benchmark
performance on 4 pillars
Variables normalized from 0 (worst) to 10 (best) for 128
countries and 9 regions
www.worldbank.org/kam
Basic scorecard for 14 variables for two points in time,
1995 and most recent
Knowledge economy index (KEI) which includes 3
variables for each of the four pillars:
Economic and institutional regime: tariff and non-tariff
barriers, rule of law, regulatory quality
Education: literacy, secondary and tertiary enrollment rates
Innovation: researchers in R&D, scientific and technical
scientific publications, and patents in the US
ICTs: fixed and mobile phone lines per 1000 people, computer
per 1000, internet users per 10,000
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KE Basic Scorecard Compared
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Innovation System Compared
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Education Comparison
Czech Republic / ECA / G7
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Czech Republic, Slovakia, Slovenia
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Belarus, Poland, Ukraine
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Estonia, Latvia, Lithuania
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Bulgaria, Hungary, Romania
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Bosnia and Herzegovina, Croatia,
Serbia and Montenegro
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Albania, Armenia, Georgia
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Kazakhstan, Tajikistan, Uzbekistan
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End
Carl J. Dahlman
Luce Professor of International Affairs
and Information Technology
Georgetown University
Email: [email protected]
Telephone: 202 687 8045
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