number of interesting lessons can be drawn from that. First, and foremost, that Indian innovation is not something that can be easily dismissed. Indian firms can come up with solutions that have wide applicability. Second, that of learning by doing and the importance of a large domestic market for creating comparative advantage. Third, the need to think and act locally and then move to act globally.
Bajaj is good at making autorickshaws because it has learnt how to make them by supplying to the domestic market. The “learning by doing for a large domestic market” is a very important point. India is a very large market since India accounts for around one-sixth of the world’s population. Practically every need of developing countries is represented in India itself, whether they be transportation, agriculture, or telecommunications. So we have a very large canvass to try out our ingenuity on and learn from doing that. Having developed solutions, we are well on our way to developing comparative advantage in those areas.
Is there any specific area that India should develop a comparative advantage in? There is. And that is in the area of alternative energy. More specifically, solar technology.
The case for India to invest in R&D for solar technology is so plain that I find it incredible that everyone and his brother is not shouting about it. Consider the following facts. First, India is conventional fuel poor. We do not have oil and have to import a good portion of our current needs. We cannot afford to rely on the whims of foreign oil producers. There is one 800-lb gorilla in the oil market and it has cornered significant sources of the global oil market. So for strategic reasons, India must reduce its dependence on foreign oil to meet its energy needs.
Second, rich nations have the resources to pay (one way or another) for the oil they consume, India cannot. For instance, the US pays for oil by directly paying the producers and indirectly by maintaining a huge military and using force strategically.
India is blessed (?) with a lot of solar energy delivered free. The sun shines too hard most of the time and very few people are making hay.
Finally, any desired technology can be developed if you throw sufficient money at it. That is a basic fact of the modern world. Everything that is theoretically possible can be developed given sufficient commitment in terms of time, effort and resources.
It is my considered opinion that energy is the most fundamental of all resources. If one can get free energy (or even cheap energy), there is no problem that cannot be solved. Energy is a substitute for land and labor. Don’t have enough land to grow food? No problem — use hydroponics and grow you food in factories. Don’t have water to do that? De-salinate sea water using energy. Don’t have enough labor? Use machines. Where do you get machines? Make them using energy.
“You have problems?”
“Yes. Lots of them.”
“You have money?”
“Yes, by the truckloads.”
“You have no problems.”
Substitute ‘energy’ for ‘money’ in the above and there you have.
OK, we were discussing the need for cheap or nearly free energy. Solar power is the answer. India needs solar power. It has a very large market for cheap solar power. India should invest in developing solar power. If India invests say $10 billion, the return on investment would be mumble billion $. First, India would save on energy imports. Then India would develop comparative advantage (and perhaps competitive advantage) in the field. Thus India would be able to sell that technology to other countries. There is a first mover advantage in being the leader in this field. Fortunately, the US and other developing countries are not taking the development of alternative energy sources very seriously. So the field is not crowded and India has a tremendous advantage.
My policy recommendati
Answered by
Shilpa Behl
, an ibibo Specialist,
at
12:07 AM on March 22, 2008
