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-theart 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.
