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Suggested Citation:"9 Concluding Observations." National Research Council. 2010. The Dragon and the Elephant: Understanding the Development of Innovation Capacity in China and India: Summary of a Conference. Washington, DC: The National Academies Press. doi: 10.17226/12873.
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9
Concluding Observations

In the final session of the conference, participants sought to identify some of the most important themes that had been identified over the previous day and a half. Moderator Denis Simon of the Levin Institute began the session by suggesting five key points:

  • We are entering an era with multiple scenarios, much fluidity and turbulence, and potential for international economic and political conflict.

  • China is producing a huge number of science and engineering graduates for what may be different paths of talent -- a “just in case” strategic innovation on the “just in time” business philosophy. Understanding the demand for talent will be important.

  • For the United States, China poses a paradigm change far greater than Japan’s growth in the 1980s. All the systems that we have taken for granted—manufacturing, education, competition—are unraveling, so Americans need to put on new glasses for viewing the world. One reality is that multinational companies have moved much further into globalization than most people perceive or understand.

  • In education, the issue is not quantity of academic degrees but quality of talent. Talent must be prepared to adapt to new environments, understand how to manage risk and uncertainty, and know how to make decisions.

  • Does the U.S. government understand what these trends mean? What are the public policy implications? Clearly, there is a need to adapt policy more quickly.

Pete Engardio of BusinessWeek observed that the conference had not turned up examples of important next-generation products coming out of China or India. Was that a function of the sectors examined or of looking in the rearview mirror?

According to Marco di Capua of the Beijing office of the U.S. Department of Energy, the fact that the world is entering an energy-constrained era is not sufficiently appreciated in the United States. Important energy issues will be production, structure, diversification and competition, and new sources. A key challenge will be how to extract oil from new or marginal sources without creating huge carbon emissions. Another will be dealing with unpleasant historical legacies. A third is how we innovate in the consumption of energy. The United States can be a leader, not by “beating others” in competition but by showing the way.

Several speakers referred to the importance of labor mobility as a source of cross-pollination in the emerging global economy. In the near term the United States is likely to experience a movement of highly trained people back to their countries of origin, including India and China. But the United States should endeavor to remain a magnet for foreign talent, for example by lowering barriers to entry, including delays in visa processing.

Near the 50th anniversary of the Soviet launch of Sputnik, conference participants were reminded that the prospect of Chinese and Indian competition may spur efforts to renew U.S. education and innovation. But conference chair David Morgenthaler observed that this will depend on recognizing that opportunities and needs change. Strikingly, the United States lacks a business plan for its future. The economy is riding Moore’s Law regarding the

Suggested Citation:"9 Concluding Observations." National Research Council. 2010. The Dragon and the Elephant: Understanding the Development of Innovation Capacity in China and India: Summary of a Conference. Washington, DC: The National Academies Press. doi: 10.17226/12873.
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increase in computer processing power for a few more years; but beyond that, future drivers of growth are unclear. What is clear, he said, is that the United States needs to do a better job of strategic planning as the economies of China and India will surpass ours in size.

Chinese and Indian participants—in particular Mu Rongping of the Chinese Academy and Rishikesha Krishnan of the Indian Institute of Management—noted that there will continue to be points of tension between their countries and the United States, particularly over trade and the U.S. current account deficit; but they expressed confidence in the flexibility of the U.S. economy and its ability to adapt and in the ability of all three countries to learn from each other how to sustain innovation and growth.

Suggested Citation:"9 Concluding Observations." National Research Council. 2010. The Dragon and the Elephant: Understanding the Development of Innovation Capacity in China and India: Summary of a Conference. Washington, DC: The National Academies Press. doi: 10.17226/12873.
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Page 43
Suggested Citation:"9 Concluding Observations." National Research Council. 2010. The Dragon and the Elephant: Understanding the Development of Innovation Capacity in China and India: Summary of a Conference. Washington, DC: The National Academies Press. doi: 10.17226/12873.
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Page 44
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The return of the once-dormant economies of China and India to dynamism and growth is one of the most remarkable stories in recent history. The two countries are home to nearly 40 percent of the world's population, but until recently neither had played an influential role in the contemporary global economy.

In the past two decades, China and India have liberalized internal economic policy, treatment of foreign investment, and trade, and have experienced economic growth at sustained high rates. From the point of view of the United States, however, the most important development in the Chinese and Indian economies in the long term may be the strides they are making in developing their own domestic innovation capacities. After a long period of underinvestment, both countries have committed to growing their science and education systems to bolster research and further economic expansion.

Some observers of the recent growth have said that both countries are surging in their efforts to spur innovation; others have emphasized the potential of one country over the other; and still others have suggested that both China and India have a long way to go before achieving innovation-driven growth. With such a range of views, The National Academies set out to describe developments in both countries, in relation to each other and the rest of the world, by organizing a conference in Washington, D.C. The conference, summarized in this volume, discussed recent changes at both the macroeconomic level and also in selected industries, and explored the causes and implications of those changes.

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