china and india as emerging technological powers carl dahlman georgetown university v knowledge...
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China and India as Emerging Technological
Powers
Carl Dahlman Georgetown University
V Knowledge Economy Forum PragueMarch 28-30, 2006
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Share of Global GDPA Two Millennium Perspective
(Madison 2000, WDI 2005) ©cjd©cjd
Share of Global GDP (1990 Internatinal $)
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China
India
United States
Japan
Western Europe
World GDP PPP (constant 2000 International $) Share (%)
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World GDP PPP Share for different regions (1980-2003)
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High income: OECD ex. US & Japan
United States
East Asia & Pacific
Japan
Europe & Central Asia
Latin American & Caribbean
South Asia
Sub-Saharan Africa
Middle East & North Africa
Global View: Knowledge Economy Index(un-weighted)
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Real GDP 2003 (Trillions of 1995 international $)
Russian Federation$1.15t
Japan3.12t
Canada$0.84t
Germany$1.98t
France$1.42t
Italy$1.36t
United Kingdom$1.40t
Brazil$1.19t
Mexico$0.81t
India$2.69t
China$5.60t
United States$9.45t
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Real GDP per capita (constant 1995 international $) 2003
Ave RGDP per capita growth 1991-2003 (%)
Relative Size 15 Largest Economies 2003
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Real GDP (PPP): Projections 2004-2015 (Using 1991-2003 Average Growth Rates)
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Trillions of 1995 international $
India China BrazilCanada France GermanyItaly Japan MexicoRussian Federation United Kingdom United States
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China
United States
JapanGermany
United Kingdom
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Canada
Mexico
Russian Federation
Brazil
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China India Most Recent
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Comparisons 1995 to Most Recent
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China India Innovation PillarScientists & Engineers in R&D
Scientific &Technical PublicationsPatents in US
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Total R&D Expenditure (PPP, 1996 constant)
Russia
J apan
USAustralia
Denmark
Canada
UK
NetherlandKorea
SpainItalyPoland
Austria
Switzerland
Finland
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Germany
Turkey
China
IndiaBrazil
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R&D expenditure as % of GNP
Global R&D Effort in Comparative Perspective (Data for 2002)
Source: World Bank SIMA Database ©cjd©cjd
China India Innovation System
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China India Education
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Share of Global Merchandise Exports1980-2004 (percentage)
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Source: WTO Database, 2005©cjd
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United States
Germany
Japan
China
NetherlandsItaly United Kingdom
France
Canada
China--StrengthsVery high economic growth, large internal marketVery high savings and investment rateExcellent at tapping into global knowledge through direct foreign investment and Chinese DiasporaBecoming world’s manufacturing baseVery large supply of excess labor will continue to give it low wage advantageBut moving rapidly up value chain from labor intensive to more technology intensive exports Efficient export trade logisticsCritical mass in R&D is beginning to be deployed to increase competitivenessStrong investments in education and trainingGovernment with strong sense of national purpose
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China -- LessonsImportance 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 placefocusing 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 growthVery effective use of direct foreign investment to move up technology ladderStrong investments in human capital as fundamental step to make the transitionEffective use of Chinese Diaspora in high tech parks and to bring in technology and access to markets
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India -- StrengthsJumped from traditional rate of 2-3% growth in past decades to 6-8% last decadeStrong science and engineering capabilities centered in chemical and software areasIs becoming worlds service center for software development and back office offshore outsourcingIs also becoming center for contract innovation work for multinational companiesHas large critical mass of educated, skilled, and English speaking knowledge workers and can increase this stockHas network of successful Indians in US and Europe providing links to markets, technology, and financeRelatively deep financial marketsIs 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 -- LessonsImportance of investments in high level technical, scientific, and managerial capital through network of Indian Institutes of Technology and Indian Management InstitutesImportance 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 growthImportance 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 ©cjd
ConclusionsGlobalization increasing; global competition intensifyingWorld Moving toward three economic blocks-US, EC, and AsiaAsian Block rising in economic importance
East Asia, and within East Asia, China’s entry into world stage unprecedented in speed, scope, and scaleIndia on threshold of becoming another global economic powerBoth have critical mass in education and innovation capability which they are beginning to deploy very effectivelyKey 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 toUpgrade broad economic incentive and institutional regime and participate more actively in global systemStrengthen formal education and life long learning to be able to constantly restructure and competeEffectively tap global knowledge and combine it with domestic innovation efforts to raise productivity and competitvenessAlign 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 regionswww.worldbank.org/kamBasic scorecard for 14 variables for two points in time, 1995 and most recentKnowledge 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 qualityEducation: literacy, secondary and tertiary enrollment rates Innovation: researchers in R&D, scientific and technical scientific publications, and patents in the USICTs: 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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EndCarl J. DahlmanLuce Professor of International Affairs and Information TechnologyGeorgetown UniversityEmail: [email protected]: 202 687 8045
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