ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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The Role of Industrial Policy in Market-friendly Economies

The paper surveys the status of vaccine research and development and its manufacture in India and discusses the fact that the country has used industrial policy instruments rather sparingly in jump-starting R&D and manufacturing of vaccines for COVID-19 vaccines. This is despite India’s acknowledged innovation capability. The paper also contrasts the Indian case with that of the United States case discussed in Part 1 of this two-part paper.

The Role of Industrial Policy in Market-friendly Economies

Given the public good characteristics of new technologies and especially those contributing to improved health, there is a strong case for state support for research and development and indeed for converting those research results to commercialise products and processes. The state support to the market is even more vital in developing vaccines for the COVID-19 pandemic, which has engulfed the whole world and has shattered the economies of countries and lives of ordinary citizens. The paper, in two parts, analyses how the state and the market have responded to the development of vaccines for this pandemic in two countries, India and the United States. India is chosen as it is one of the leading manufacturers of low-cost vaccines, and the US is selected as it is the top country where systematic R&D on vaccines is carried out. In this part, the focus is on the renewed debate on the use of industrial policy and surveys the specific policy instruments used by one of the leading market-friendly economies in the world, namely the US, in successfully developing within a short period of time a number of highly effective vaccines for COVID-19.

Newly Formed Empowered ‘Technology Group’ and COVID-19

The role of the empowered “Technology Group” with respect to building and promoting health technologies is discussed and a possible road map is charted out.

 

Developing India’s Mobile Phone Manufacturing Industry

In the absence of any major domestic mobile phone manufacturers, increased imports of mobile phones have contributed to a widening of India’s trade deficit. An analysis of the policy instruments put in place to incentivise the domestic manufacturing of mobile phones reveals a spike in domestic manufacturing, leading to significant reductions in the imports of mobile phones. However, domestically manufactured phones are dependent on imports of parts. This high import dependence itself is an outcome of the weak innovation capability in the domestic industry.

Robot Apocalypse

Anxiety about the prospect of technology displacing jobs on a large scale is currently dominating academic and public debate. A number of different occupations are likely to see an increased rate of automation in the near future. However, while studies have shown that this is likely to have an adverse effect on employment, they have all used the occupation-based approach to arrive at their conclusions. A task-based approach is used to arrive at a more accurate estimate of the effect of automation on manufacturing employment in India. Employing a comprehensive data set from the International Federation of Robotics, the nature and extent of diffusion of industrial robots into the manufacturing industry in India is also analysed.

Economists and Public Policy in a Globalised World

Economic Theory and Policy Amidst Global Discontent edited by Ananya Ghosh Dastidar, Rajeev Malhotra and Vivek Suneja, London: Routledge, 2018; pp xvi+463, 995.

What Is Happening to India’s R&D Funding?

India’s science and technology policies advocate increased investment in research and development. However, in 2017–18, the tax incentive for company expenditure on R&D was reduced. This is likely to have major ramifications for R&D at a time when India’s domestic research effort is already in decline.

New IPR Policy 2016

A critique of the new Intellectual Property Rights Policy 2016, designed to strengthen India's IPR regime "to foster creativity and innovation," indicates that it has put the interests of intellectual property owners, or global capital above that of public. Though some measures delineated in the policy are laudable, it is clear that the policy objectives are not evidence-based and are tailor-made to suit the requirements of the Western governments.

Is the Government Justified in Reducing R&D Tax Incentives?

A vast majority of studies assessing the impact of R&D tax incentives provided across the world conclude that such tax incentives spur investments. However, in India only a limited number of fi rms, especially small and medium ones, have actually been taking advantage of the state’s fi scal generosity. 

Diffusion of Broadband Internet in India

India has one of the lowest diffusion rates for broadband among the Brazil, Russia, India, China and South Africa grouping, or BRICS. India has also been very slow in terms of the diffusion of mobile phone services. While it took only five years for mobile phone services to reach a diffusion rate of 75%, after 10 years the diffusion rate of broadband has not even reached 10%. In this context, this study attempts to measure the rate of diffusion of broadband in the country, identifies the factors that determine its adoption at the subscriber level, and discusses the policy challenges for hastening the diffusion rate.

Development through Manufacturing

Pathways to Industrialization in the Twentyfirst Century: New Challenges and Emerging Paradigms edited by Adam Szirmai, Wim Naudé and Ludovico Alcorta, UNU-WIDER Studies in Development Economics, Oxford: Oxford University Press, 2013; pp xxi +443, £ 60.

Emergence of India as the World Leader in Computer and Information Services

The paper analyses the changing leadership in computer and information services exports in the world. Leadership, measured in terms of export shares, appears to have moved from the United States, United Kingdom and Germany to Ireland and then to India. India has been trying to maintain her leadership through improvements in technological capability and in the process has also become a base for multinationals to set up operations. These multinationals have been increasing their innovative ctivities in India as revealed through increased patenting, and domestic Indian enterprises have followed, although very slowly, in improving their technological capability. Two conclusions can be drawn. Leadership in CIS is basically a function of the availability of highly trained software engineers. But the sustainability of leadership depends on whether the industry is domestic or foreign owned. The paper analyses the changing leadership in computer and information services exports in the world. Leadership, measured in terms of export shares, appears to have moved from the United States, United Kingdom and Germany to Ireland and then to India. India has been trying to maintain her leadership through improvements in technological capability and in the process has also become a base for multinationals to set up operations. These multinationals have been increasing their innovative activities in India as revealed through increased patenting, and domestic Indian enterprises have followed, although very slowly, in improving their technological capability. Two conclusions can be drawn. Leadership in CIS is basically a function of the availability of highly trained software engineers. But the sustainability of leadership depends on whether the industry is domestic or foreign owned.

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