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April 17, 2011




Page: 20/35

Home > 2011 Issues > April 17, 2011

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America hopes to win the race with Asian giants

By Dr R Balashankar

Advantage: How American Innovation can Overcome the Asian Challenge, Adam Segal, WW Norton & Company, Inc. pp 294 (HB), $26.95

ONCE there was a race between the rabbit and the tortoise. Rabbit having crossed more than half the distance turned and saw the tortoise just about setting out. So it decided to take a break and relax and fell into a delightful sleep. When it jolted out of sleep, it realised that the race was over and the tortoise had reached the goal post. This ancient Panchtantra story sums up the situation America is in today.

It has woken up from complacency only to find the Asian tortoises, whom they used to classify as sleeping dragon and elephant (China and India) have picked up pace and are on the verge of overtaking America.

Here is what Adam Segal says in his book Advantage: How American Innovation can Overcome the Asian Challenge, "While the Asian powers clearly have their eyes on the prize, the United States has appeared distracted, neglecting science and underfunding basic research. While Americans built McMansions, Asia spent on science, technology, and infrastructure. After World War II, the United States accounted for 50 per cent of the world’s research and development; today it is responsible for close to one-third." India and China accounted for more than "40 per cent of the world’s wealth" two centuries ago, he says and they could soon regain that status.

Segal goes into minute details on the academic scenario, investment into research and the systems of governance in China and India. He counts the strengths and weaknesses of each nation in turn, throwing in between comparative information about the US. According to him India and China are offering stiff competition in hardware, in processing, rather than creating new technologies and profitable ideas. One of India’s minus points lies is the fact that R & D is highly government-controlled, with bureaucratic stranglehold on planning and spending. The work in the CSIR (Council for Scientific and Industrial Research) labs is largely untouched by market pressures, he says. Also, according to a 2005 McKinsey report, only 10 per cent of graduates in China and 25 per cent in India had practical, analytical, and teamwork skills that foreign companies required.

The worries about China are different. "There are also widespread concerns about plagiarism and academic dishonesty in China. A survey quoted in China Daily of 180 graduates with doctorates, 60 per cent admitted to paying for their work to be published in academic journals, and another 60 per cent said that they had copied someone else’s work. In 2010, the BBC reported that underemployed masters and doctoral students were hard at work writing papers for other people, creating a $100 million market in ghost-written papers and bloating publication lists." Segal gives the instances of Chen Jin, who was hailed in the Chinese media for his innovation of the signal processing microchip, only to be later disgraced for having stolen it from Motorola, erasing the logo and showing it to the world as his work. An anecdote mentions how the contractors in order to cut costs, use substandard or even deadly chemicals. Whenever Segal visited a new office building, he found that it was a veritable garden. The plants were placed on the desk of the staff as they are believed to absorb toxins and had been placed on each table. This goes to show that there is lack of maintenance of standards and checks and balances in the system.

In fact, nearly two-thirds of the book is on India and China counting in turns their respective positions on various aspects. There is an undercurrent of eagerness to prove that America has an edge over both these countries, but for the fact that its head and heart are not where they should be. The reason for this, according to Segal is the difference in the approach of two powerful groups in America. The Pentagon group supporting government investment in R & D while the chief executives of MNCs and economists insisting that innovation in any part of the globe is a win-win for all. As he mentions, a majority of Indians with PhD are in the United States, not India.

There are several interesting observations Segal makes about India: While in the US it takes about six procedures and six days to start new business, in India, it takes an average of 195 days to get all necessary licenses and any dispute between partner reaches courts, it takes an average of 1420 days (four years) to settle. While in most developed democracies the poor stay at home and the rich and the middle class go to vote, reverse is true in India. There are 16 separate agencies working in or controlling education in India, often at cross purpose.

Advantage is what the Americans want to hear, that they can still beat the challenge from the Asian giants and maintain the top position by ‘innovation.’ For this, Segal says the university-industry nexus has to be revived. They need to be located close to each other for greater coordination. President Bush had signed the American Competes Act in August 2009 that doubled the budget for research in various American institutions. It was triggered by a fear that the US was facing shortage of scientists and engineers. However, Segal quoting corporate sources says that engineers and scientists are being laid off. In fact, according to a report, in the first quarter of 2009 the unemployment rate for engineers and workers in computer occupation was higher than for all other professionals.

Having said all this, Segal concludes "Only American society can currently muster all of the skills needed to face globalisation-ability to conduct cutting-edge, interdisciplinary research, recognise new markets and consumer demands; manage across time, distance, and culture; tolerate risk and support entrepreneurship; and welcome new ideas and talent no matter what their origin or social standing. The United States has strengths that are the envy of many and the cultural social and political barriers to innovation in Asia are real and hard to overcome."

According to a 2009 Newsweek survey quoted in the book, 81 per cent of Chinese, compared to 41 per cent of Americans, "believed that the United States was staying ahead of China in innovation." Clearly the book is intended to give the Americans the reassurance they are looking for.

Adam Segal, Ira A Lipman Senior Fellow for Counter-terrorism and national Security Studies at the Council for Foreign Relations and author of a book on China and articles on Asia, has taken a roll-call on the America’s position in the world as a technological leader. He has done so using the closest two contestants. In content, the book is informative, thought provoking and useful. A good book to pick up.

(WW Norton & Company, Inc., 500 Fifth Avenue, New York, NY 10110)




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