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Re: Indiresan: a critique

Two Points:

First: There need not be lets do the bicycle now and high tech later.

Second: The developed nations today are entering the serices economy
where manufacturing is taken for granted. Today whats hot is brians
behind a company not just the muscle power.

I see Microsoft, Intel, Sun, ..... have a major section of engineering
done by Indians. Pentium was managed by an Indian and Pakistani leading
the project. There is nothing but lack of initiative and economy that
Indians are not doing this on thier own in India. Infosys did, started
10 years ago by an ex IITK graduate which is a NYSE traded company
today. Microsoft has ~30000 employees, of which no more than 50%
are true engineers. This translates to a team of ~ 15000 producing
wealth worth.... And the infrastructure required to make this work
in India is VERY feasible today, a fact proven by Microsoft's plans for the
ONLY other overseas development sector to be set up in Hyderabad. 


As I see, the message is invest in where the ROI (return on investment)
is largest. Innovate to capture bigger markets and stay ahead of competition.
Research, if funded by industry or for product (like ISRO) can show

> Kush's view:
> ------------
> > I think that is a critical point.  Yes, to some extent you can borrow
> > and have a cookie cutter assembly line producing similar products and
> > can find success because of low labor costs.  But once your labor
> > costs go up and you start loosing that edge the only way you can keep
> > up is through innovation as Japan has.   China is probably realizing
> > that now.  They know that shoes, toys and stuffed animals can take
> > them only so far.  That is what japan realized in the early sixties. 
> The comparative advantage India has is in a) cheap labor and b) high
> quality brain power. Therefore the only sensible thing that we can do
> today is to do what Japan did for 85 years before it started innovating,
> or that China has been doing for 20 years. I am happy to let all of our
> incomes grow at 10% in real terms per year for 20 years, at this stage,
> and forgeo the "dream" of a Nobel Prize in Chemistry for about 20 years.
> Japan did not "realize" in the early 60s that it had to do better than
> copy goods. It was economically **ready** to take up that challenge. We
> all could "realize"  that innovation is better than mere copying, but that
> won't help us one bit, since we do not possess any way on earth to beat
> the mighty IBM or Boeing today. Neither our private nor our public sector
> can come anywhere close to the level of research that these organizations
> are able to churn out daily (often using Indian brains!). We are simply
> not "ready" for that. We are only ready for imitation, and producing
> cheap, high quality goods, like bicycles. Why we don't produce the best
> bicycles in the world is another issue that I'll try to tackle below.
> Once we are at a middle level in income, and poverty does not haunt every
> policy maker (and every discussion list!), we can try to boost our
> research to a much higher level, as well as ensure that all our engineers
> work in India (voluntarily), and also attract the best brains from Africa,
> or even the USA.
> > When by early seventies Japan entered the US auto market, the US
> > automakers laughed.  By Mid eithties they were not laughing but
> > bitterly complaining that Japan through "unfair" trade practices had
> > taken up one third of the US auto market.   All that could not have
> > happened without innovation.
> As mentioned above, this stage did not miraculously come into Japan: the
> ability to beat America in car production. They earned it by producing
> lower level of technological goods, in a better and more efficient manner,
> first, for decades. And ensuring that all their people were not only
> literate, but highly educated. A child cannot become a Ravi Shankar
> overnight. 
> A few IIT engineers (those that remain behind in India) cannot beat IBM or
> Boeing, straightaway. They first have to learn to produce and sell simple
> camcorders and maybe bicycles. The best camcorders and best bicycles in
> the world, though. Only the best sell in this competitive market. Once
> rich enough, they can move on to bigger and yet bigger tasks like
> producing the biggest airplanes in the world. Today, our top engineers
> cannot even produce the world's best toy airplane, what to talk of a real
> Boeing! (Ouch! that hurts, you'll say, but you know in your heart of
> hearts: it is true. Today, it is China that produces the best toy
> airplanes, not India: our toy planes fall apart the moment you touch
> them!) 
> > Coming back to the same question (and I know we are digressing here) I
> > do not know why the Indian private sector has shown no innovative
> > spirit.  I find that  dangerous as well as disturbing.
> This is the question that we have attempted to answer through much debate
> on the economic policy issue. The lack of competition, in one word, is the
> answer to this question. 
> We did not allow the Atlas and Hercules (or whatever) companies to compete
> against the best in the world. We blocked off all entry by "foreigners"
> (we are always scared of competition because we tend to quickly lose! We
> were always afraid of losing our sovereignty, again, to these merchants
> who produce better bicycles and toys!).
> The time has come to play by the rules of the game, which means, to
> participate in the competition of the world to SELL goods, not simply talk
> about big research and big inventions. Wealthy people can afford the
> luxury of further research. We simply need to produce the best goods that
> will sell (meaning, in the K-Marts of the world). That will provide us
> with foreign exchange, jobs, and completely eliminate poverty. Well,
> that's a bit too simplistic, but such a generalization will suffice for
> now. 
> Hope I am not off the track! We can further discuss this vital issue, if
> you like.
> Sanjeev