The Dragon vs the Elephant: Comparative analysis of innovation capability in the telecommunications equipment industry in China and India

Sunil Mani

Centre for Development Studies, Trivendrum Working Papers from Centre for Development Studies, Trivendrum, India

Abstract: China and India have one of the largest telecommunications equipment markets in the world. The paper employs a sectoral system of innovation framework towards understanding the differential outcomes in innovation capability building in the industry achieved by China and India. The countries have pursued widely diverging strategies for developing their domestic innovation capability. India followed a very rigid policy of indigenous development of domestic technologies by establishing a stand-alone public laboratory that developed state-of-the art switching technologies. These were then transferred to manufacturing enterprises in both public and private sectors. The enterprises themselves did not have any in-house R&D capability. The public laboratory was also not given any strategic direction, even though it was technologically speaking, very competent. Consequently the country, despite possessing good quality human resource was unable to keep pace with changes in the technology frontier and the equipment industry has now become essentially dominated by affiliates of MNCs. China, on the contrary, first depended on MNCs for her technology needs in this area. But subsequently encouraged the emergence of three national champions, two of which are erstwhile public laboratories. The country has built up considerable hardware capability in both fixed line and mobile communications technology and has also emerged as a major player in world markets. Although the sectoral system of innovation in both the countries were promoted and nurtured by the state through a variety of instruments, the quality of such interventionist strategy is found to be better in China. The final outcome proves this line of argument.

Keywords: Innovation capability; China; India; Telecommunications industry; Digital switching systems; Mobile telephony (search for similar items in EconPapers)
JEL-codes: L63 O31 O32 O38 (search for similar items in EconPapers)
Pages: 78 pages
Date: 2005-07
New Economics Papers: this item is included in nep-cwa, nep-dev, nep-ino, nep-tid and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Working Paper: The Dragon vs. The Elephant: Comparative Analysis of Innovation Capability in the Telecommunications Equipment Industry in China and India (2006)
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