The Hindu Business Line : India found wanting in overall technology diffusion

Study pointers
Economic activity remains less exposed to foreign tech.
In some States, digital divide might increase.
India does not score substantially better than many African nations.

Our Bureau

Bangalore, Jan. 11 India’s amazing absorption of technologies, which has earned it a niche among globally techno savvy countries, has however not helped it in the penetration of new technologies across all sectors of the economy, according to a World Bank report.

The report — Global Economic Prospects 2008: Technology Diffusion in the Developing World — released here on Thursday revealed that on a per capita basis, the country continued to lag behind middle-income countries in the rate of technological diffusion, research and development expenditures, attainment level of basic and higher education, availability and quality of logistics services.

The technology diffusion in Silicon City of India (Bangalore) was less compared to cities of Russia, China and Brazil, the 201-page report said.

Africa score

Mr Andrew Burns, Lead Economist and main author of the report, said India does not score substantially better than many African countries in terms of the overall diffusion of technologies and there was limited penetration of technology in rural areas which accounts for more than 70 per cent of the population, but less than 30 per cent of the GDP.

For instance, last June, in tele-density, the number of subscribers was 52.3 per cent for urban dwellers compared with 6.5 per cent for rural inhabitants, he said.

Despite the openness of the economy, economic activity in the country remained less exposed to foreign technologies than other developing countries. The foreign direct investment comprised only 0.8 per cent of the country’s GDP against 3.5 GDP in China and 1.9 per cent in Brazil.

It noted that hi-tech imports formed only 2.3 per cent of GDP compared with 7.9 per cent in China in 2005.

Digital divide

The digital divide between rural and urban areas promised would narrow down in the long-term, particularly high income States and major cities.

However, in some States, in the remote rural areas the gap might increase over time. Rapid technological progress in developing countries helped to raise incomes and reduce the share of people living in absolute poverty from 29 per cent in 1990 to 18 per cent in 2004. Despite these gains, the technology gap between rich and poor countries remained enormous, he said.

“Technological progress increased 40 to 60 per cent faster in developing countries than in rich countries between the early 1990s and early 2000s,” said Mr Burns.

Mr Uri Dadush, Director, World Bank Development Protection Group, said that the weak diffusion of technology within countries held back overall technological achievement in many countries. “Major centres and leading firms in Bangalore and Mumbai may operate close to the global technological frontier, most firms in these cities operate at much lower levels of productivity,” the report noted.

Resilience in developing economies was cushioning the current slowdown in the US, with real GDP growth for developing countries expected to ease to 7.1 per cent in 2008, while high-income countries are predicted to grow by a modest 2.2 per cent, the bank said.