India and the Knowledge Economy: Leveraging Strengths and Opportunities

India and the Knowledge Economy: Leveraging Strengths and Opportunities

India and the Knowledge Economy: Leveraging Strengths and Opportunities

India and the Knowledge Economy: Leveraging Strengths and Opportunities

Synopsis

In the global knowledge economy of the twenty-first century, India's development policy challenges will require it to use knowledge more effectively to raise the productivity of agriculture, industry, and services and reduce poverty. India has made tremendous strides in its economic and social development in the past two decades. Its impressive growth in recent years--8.2 percent in 2003--can be attributed to the far-reaching reforms embarked on in 1991 and to opening the economy to global competition. In addition, India can count on a number of strengths as it strives to transform itself into a knowledge-based economy--availability of skilled human capital, a democratic system, widespread use of English, macroeconomic stability, a dynamic private sector, institutions of a free market economy; a local market that is one of the largest in the world; a well-developed financial sector; and a broad and diversified science and technology infrastructure, and global niches in IT.But India can do more--much more--to leverage its strengths and grasp today's opportunities. 'India and the Knowledge Economy' assesses India's progress in becoming a knowledge economy and suggests actions to strengthen the economic and institutional regime, develop educated and skilled workers, create an efficient innovation system, and build a dynamic information infrastructure. It highlights that to get the greatest benefits from the knowledge revolution, India will need to press on with the economic reform agenda that it put into motion a decade ago and continue to implement the various policy and institutional changes needed to accelerate growth. In so doing, it will be able to improve its international competitiveness and join the ranks of countries that are making a successful transition to the knowledge economy.

Excerpt

Knowledge, as it is applied in entrepreneurship and innovation, research and development, software and product design, and in how people use their education and skills, is now widely believed to be one of the key sources of growth in the global economy. The increasing importance of knowledge creates both a challenge and an opportunity for the developing world. A challenge in that, to be competitive internationally, countries must be able to participate effectively in the knowledge-driven supply chains and markets that now dominate the global economy. But for those who prepare themselves to face this challenge, the knowledge and information revolution can contribute greatly to promoting economic growth and social development and to reducing poverty.

India can tap into a number of strengths as it transforms itself into a knowledge-based economy: skilled human capital, a democratic government, widespread use of English, macroeconomic stability, a dynamic private sector, institutions that support a free market economy, one of the largest local markets in the world, a well-developed financial sector, a rich cultural base that generates a wealth of ideas, and a broad and diversified science and technology infrastructure, as well as global niches in information technology. This book provides a broad assessment of India's readiness to embrace the knowledge economy, highlighting that, in order to grow and be internationally competitive, India must continue to strengthen its economic and institutional regime, develop educated and skilled workers, create an efficient innovation system, and build a dynamic information infrastructure. In particular, India should further reform its overall economic and institutional environment, and press on with the economic reform agenda that it put into motion more than a decade ago to accelerate growth.

Moving forward with such an ambitious strategy requires raising awareness among all stakeholders in government, the private sector, and civil society about the importance of this transformation; effective leadership will be key in articulating the vision. We hope that this book will stimulate a discussion of the emerging policy agenda for the knowledge economy in India.

The transition to a knowledge economy, however, is not only about shaping the reform agenda from the top. It is also about trial-and-error experimentation with what works and what does not work in the Indian context and about how to take successful bottom-up initiatives to scale. This process will require India to monitor its achievements and adjust its strategy to changing conditions. India has produced many innovations that can be scaled up.

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