Towards a National test...

Indian industry must see R&D

Over 30 years ago, three economists — Chris Freeman in the UK, Bengt-Ake Lundvall in Sweden and Richard Nelson in the US — began talking of National Innovation Systems. It helped that they represented different countries and approached innovation from an international and comparative perspective, greatly enhancing our understanding of what makes an effective ecosystem. Innovation largely happens at firms, so they began there. Firm capacity is affected by both what they do themselves and the institutions around them. The trade regime can foster production for the world or an inward-looking mindset. The education system provides skilled (or not!) labour, engineers and researchers. Publicly funded research can enhance science; where it is done affects how it connects with industry. Public policy can provide incentives for investing in R&D, either directly or through patents. The culture of entrepreneurship affects investment in different kinds of capabilities. And broader cultural factors influence how entrepreneurs define “good”.