We always talk about the Indian Institutes of Technology [IITs] and Indian Institutes of Management [IIMs], both of which have trained some of India’s top business leaders and leading entrepreneurs. But they’re just a small part of a much bigger education system in India, in which the vast majority of universities stress rote memorization, use outdated curricula, and provide no instruction in English. In fact, according to the government itself, something like two-thirds of all universities and 90 percent of all colleges are considered to be at poor to middling levels. The IITs and the IIMs themselves are very good at training people, but they do very little basic research. There’s a massive plan to expand university education in India, but the question is going to be, Who will staff it? Someone who teaches at an IIT could probably make two or three times as much going to work for Infosys or Wipro. The last time I checked, IIT Delhi had about one-third of its positions vacant.
On the entrepreneurship side, great things are happening, and a lot of young people are starting companies. But I think part of the problem right now involves incentives. There is a lot of money to be made in established markets such as retail, software services, and telecom, but we’re not seeing a lot of science-based, new-to-the-world innovation. Some argue that if you look at Infosys and Wipro and those types of companies, they’ve moved up so far in the value chain that the type of R&D they’re doing for Western companies is increasingly sophisticated and creative, which is, I think, probably true. But those gains aren’t really captured by the Indian economy. It’s still the foreign firms that are capturing the gains.
S+B: Where can the U.S. find its competitive edge?
SEGAL: The U.S. is incredibly strong in terms of its software of innovation, and that can lead the U.S. forward. That’s not to say that the U.S. should ignore hardware, or that it shouldn’t be spending more on R&D. But just focusing on hardware, which is what the debate has tended to do, seems to me to be a losing game for the long term. Right now the U.S. spends a lot more than China and India, but given the trajectory of the national economies, especially the Chinese economy, eventually those countries are going to spend as much as or more than we do. Therefore, I see the hardware race as a losing proposition for the United States.
The traditional model for how the U.S. works in science and technology was like the old energy grid: the U.S. thought of the ideas and then sent them out to the rest of the world, in the same way you generate energy and you send it out. Instead, the U.S. should start to think of itself as a smart grid. The idea of a smart grid is that you can determine where the greatest demand is and have the ability to moderate and change the flow of energy, but also that people can feed energy back into it. So if I have solar panels on my roof and by three o’clock in the afternoon I’ve already produced enough electricity for my home for the day, I can sell the rest of it to the grid. Increasingly, inventions and ideas will be happening in the places where the U.S. used to just send ideas. And the U.S. has to be able to figure out what those ideas are and how it can apply them to markets and develop them.
This flowing back and forth of people and ideas is incredibly important to the country’s future strength, and right now it is also one of its biggest competitive advantages. If you compare the U.S. to Japan or to Korea or even to European countries, our ties to China and India are much stronger, because of how many Indians and Chinese study in the United States. We want to make sure that these connections remain tight. We need to ensure that the U.S. stays tapped into emerging new centers of technology and innovation. Some of this has to do with ideas flowing into the U.S. and, in particular, with getting visa policy right. And then a lot of it has to do increasingly with young U.S. scientists and engineers spending time abroad.