Monday, September 2, 2013

When China is looking for next Elon Musk, Bryan Mezue thinks Emerging Markets don't need one

Via HBR:
In reality, most of the significant progress made in the world's follower economies over the past 50 years has been through adopting old technologies. Paragons of international development like Korea, Taiwan and Hong Kong relied heavily on basic manufacturing copied from the West in order to find a firm footing on the development ladder. China's adoption of Western and Japanese technologies was a key step in its upheaval of hundreds of millions over the poverty line. Japan itself used to be labeled a copycat with low quality products. Time and time again, the rise of from follower to frontier status has depended on technology transfers, across nearly all the sectors of the economy.
Technology transfer. It sounds like a dirty, anti-Musk word. It lacks the magic and creativity of inventive thinking and Ivy League teams. Yet it has increased the incomes of hundreds of millions, and, crucially, it has done this in a sustainable way. Because when low-income earners learn how to make cheap copies, this is often a first step in the process to making more sophisticated products.
Governments and corporations in developing markets should be paying more attention to technology transfer. It makes economic sense and it is probably the lowest hanging fruit in accelerating the catch-up process. It happens across many channels: government institutions (e.g. Korea's Electronics and Telecommunications Research Institute), cross-border corporate activity (e.g. JVs, M&A, licensing, outsourcing), and human capital (e.g. university partnerships, exchange programs, diaspora programs).
International students and foreign graduates should also be paying attention to technology transfer. The problems Elon Musk is solving are no more important than the problems that need to be solved in the follower economies of the world. Musk is celebrated worldwide, and deservedly so. But what we really need is new Elon Musks for follower economies.

The author states that "Governments and corporations in developing markets should be paying more attention to technology transfer [than grand innovation]." Maybe he would like to have China in the audience. China is looking for its own Elon Musk or, Steve Jobs.
China is working hard to transfer from a "follower economy" to "frontier economy". So technically, the author can claim that China is no longer a member of "emerging markets".
The key is not the dichotomy of emerging vs. frontier or innovations vs. transfer. The key is what problems they are trying to solve. Technology transfer or innovation is just the "how" to solve it. For a problem that is already solved technologically, re-inventing the wheel would be waste of resource and everybody understands that.
Because governments and big corporations in developing markets have greater resources than other parties, they put out the incentives to the scientists, engineers and etc. It is their responsibilities to set the priorities of the problems.
Chinese government is sponsoring some basic research, which attracts criticism that it produces publications in the top scientific journals, but not much impact the economy. However, such behavior is not Elon Musk or Steve Jobs.
Elon Musk and Steve Jobs look at the market, find a problem others don't see, and solve it in a way others don't think possible. That mindset is needed in any economy, developing or developed.
To think that any problems "emerging markets" faces today was solved by the "frontier economies" already and thus those problems would be solved efficiently by technology transfer without need for innovative thinking is close to bigotry.

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