India and China have made clever use of foreign technology - assembling it, copying it, servicing it and customising it - but, as South Asia business correspondent of The Economist Simon Cox explains in a special report in this week’s Economist, their firms have yet to create too much to rival it. While “techno-nationalists” may worry about this, economists would find much to applaud, he adds.

The report argues that India and China have more to gain from the adoption and assimilation of technology than from invention.

Mix-and-match

The most urgent task for the two countries is to make wider use of know-how that already exists, the report says, citing India’s generic drug makers as an example.

According to the report, India does not need to focus on invention per se in order to flourish. Instead, if it gainfully absorbs, assimilates and uses the technology available in the country, India’s economy could transform itself as China’s has.

Innovation is risky

“Indian and Chinese firms have a comparative advantage in finding new uses for existing technologies and combining them in novel ways,” he says.  “This kind of ‘architectural innovation’ may be scientifically modest but it can nonetheless be commercially significant. This was, after all how Japan’s electronics firms came to dominate their market,” Cox adds.

The report asserts that while India and China cherish the idea of pushing back the limits of technology, invention is risky, costly and frustrating work. Imitation still has much to recommend it.

The report concludes that ultimately it will be the countries that are willing to mix-and-match imported knowledge with ideas of their own that will thrive.