Now
a day, it is a widely accepted fact that Innovation and Entrepreneurship is
prime driver of economic progress (Kasper & Streit, 1998; Leff, 1979). And
entrepreneurship is a consequence of a country’s development – specifically the
adoption and development of institutions that encourage the entrepreneurial
aspect of human action. Stimulating entrepreneurial action will in turn spur
economic development and growth. Therefore, if economic growth is the goal,
attention should be paid to achieving the institutional mix that encourages the
entrepreneurial aspect of human action. (Peter J. Boettke and Christopher J.
Coyne, 'Entrepreneurship and Development: Cause or Consequence?')
In
any country, the existing state of economy is most important factor, which
needs to be understood to do an analysis on prospects of Entrepreneurship. WEF (World
Economic Forum) Global Competitiveness Report identifies three phases of
economic development based on GDP, per capita and the share of exports
comprising of primary goods. These are (a) the factor-driven phase dominated by
subsistence agriculture and extraction businesses, with a heavy reliance on
labor and natural resources, (b) the efficiency-driven phase, further
development is accompanied by industrialization and an increased reliance on
economies of scale, with capital-intensive large organizations more dominant
and (c) the innovation-driven phase, businesses are more knowledge intensive,
and the service sector expands.
Global
Entrepreneurship Monitor 2010 Global Report places Indian economy in the phase
of factor driven economy. Even in this group of economies, India has lower Percentage
of Early-Stage Entrepreneurs. Following are other important findings (given in
the report) on factor driven economy
1. Total
Early-Stage Entrepreneurial Activity (TEA) includes individuals in the process
of starting a business and those running new businesses less than 3 ½ years
old. These rates are highest for the factor-driven economies, and decline with
greater development levels.
2. While
the factor-driven economies have the highest TEA rates, they also have the
highest proportion of necessity-driven motives, where entrepreneurs are pushed
into entrepreneurship because they need a source of income.
3. Individuals
in factor-driven economies tended to generally rate more positively on the
attitude measures, with declining patterns exhibited with higher development
levels.
4. The
factor-driven economies have, on average, the lowest level of international
customers.
When
it comes to Innovation, India was ranked at 62nd position in the 2011 edition
of the Global Innovation Index rankings. The scenario for Innovation in India
can be summarized in the following excerpts taken from Business Line (article -
'India slips to 62nd rank in innovation: Report' published July 01, 2012)
“The
Global Innovation Index is computed as an average of the scores across inputs
pillars (describing the enabling environment for innovation) and output pillars
(measuring actual achievements in innovation), a WIPO (World Intellectual Property
Organization) statement said. It added that five pillars constitute the
Innovation Input Sub-Index: ‘Institutions,' ‘Human capital and research,'
‘Infrastructure', ‘Market sophistication' and ‘Business sophistication'. The
Innovation Output Sub-Index is composed of two pillars: ‘Scientific outputs'
and ‘Creative outputs'. The Innovation Efficiency Index, calculated as the
ratio of the two Sub-Indices, examines how economies leverage their enabling
environments to stimulate innovation results.
India comes in at 44th on the Output Sub-Index,
within the top 30 on labour productivity growth (21st with 4.5 per cent) and
computer and communications services exports (4th globally, with 70 per cent of
total commercial service exports).
It
also has positions within the top 40 on two knowledge diffusion indicators:
high-tech exports (32nd, at 6.34 per cent of GDP) and FDI net outflows (38th,
at 1.08 per cent of GDP). On creative outputs, it ranks 39th on national
feature films produced, 22nd on daily newspapers, 9th on creative goods
exports, and 29th on creative services exports.
India's
position, however, is dragged down by its poor performance on the Input side
(ranked 87th): India is in the last quintile on sub-pillars business
environment, elementary education, tertiary education, and knowledge workers.
But
the country has high marks (within the top 40) on R&D (35th); general
infrastructure (11th), a result driven by its 9th position on gross capital
formation (at 35 per cent of GDP); and investment (15th), a result driven by a
deep and dynamic stock market.”
It
is given in chapter 13 (Human Development) of Economic Survey 2011-12 Report
that, the census projection report shows that the proportion of working age
population between 15 and 59 years is likely to increase from approximately 58
per cent in 2001 to more than 64 per cent by 2021. In absolute numbers, there
will be approximately 63.5 million new entrants to the working age group
between 2011 and 2016. Accordingly, a three-tier institutional structure on Coordinated
Action on Skill Development consisting of (i) the Prime Minister’s National
Council on Skill Development(NCSD), (ii) National Skill Development
Coordination Board (NSDCB), and (iii) National Skill Development Corporation
(NSDC), has been constituted.
Further,
to enhance prospects for innovations and entrepreneurship, a national plan to
develop skillful workforce (at all levels) would need to be addressed to meet
the future demands of human resource. The
recent economic growth has been driven by dissemination of technology and
expansion of services sector in India. And what has significantly contributed
to make all this happen is the initial edge India developed in business of
revolutionary ICT technology. So far, India has catered well in developing
sufficient skills required for complexity and diversity of ICT business. A
World Economic Forum (WEF) in the year 2010 reported that India will face huge
skills gaps in some job categories due to low employability over the next 20
years and also warned of a looming global labour crisis. Indicating on future
talent shortages, Piers Cumberlege, senior director, partnership, at the World
Economic Forum had said that "Today's high unemployment rates mask
longer-term talent shortages that may affect both developing and developed
countries for decades". The report calls on governments, companies,
educational institutions and international organizations to collaborate
systematically to address talent shortages and increase talent mobility.
There
is tremendous scope to boost innovation and entrepreneurship through systematic
development of suitable business environment. But, it should also be taken into
cognizance that eroding traditional paradigm of “Distributed Production”
(Economy of Livelihood) is resulting in unemployment (more so for illiterate
and unskilled population). In the prevailing patriarchal social set-up in
India, this is further causing migration of male population (in search of jobs)
into cities (increasing number of 'Environmental Refugees'). In the process
rural females are becoming poorer (a phenomenon known
as 'Feminization of Poverty'). All this is suggestive of a changing patterns of
earnings in society, which appears to be much favorable for a certain class of
skilled labors, but not so favorable for larger mass of unskilled or illiterate
labors. Therefore, an analysis of available capabilities of earning across
different sections of society could be carried out. This will become basis for
doing balancing act by strategic promotion of industrial development (for mass
production) in selected sectors (like ICT, Steel, Cement, where skilled people
would be absorbed) to leverage skilled workforce, but at the same time taking
conservative approach in certain traditional sectors (like say agriculture,
fishing, which have been traditionally fort of unskilled laborers) to
facilitate livelihood of unskilled workforce. And then, in follow up it may be
advisable to chart out a development plan for traditional sectors to promote systematic
modernization through step by step process in such a way that labors dependent
on these sectors do not lose their means of livelihood and slowly start
adapting to use of newer ways in traditional sectors.
Following
could be prime considerations for the way ahead in this dimension:-
a)
Selective promotion of Innovation and
Entrepreneurship (through suitable legislation and adoption of appropriate policies)
in such a way that a balance between Mass Production and Distributed Production
is established for larger benefit of society.
b)
Developing ecology and supportive environment
for business to prosper.
c)
Human resource development as per future
prospects in business and academics.
REEFERENCES:-
Please refer to REFERENCES section given in the blog ‘ICT
FOR DEVELOPMENT IN INDIA’
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