The latest India Innovation Index (III) was released by the NITI Aayog in October 2019: a composite state-wise and national metric on innovation, documenting enablers (like human capital) and performance results (like knowledge output) that make up innovation. It is evident that the III draws inspiration from other similar indices, like the Global Innovation Index, and uses an input-output model to measure the innovation efficiency ratio. The enablers are inputs, including human capital, investment, knowledge workers, business, environment, and safety and legal environment; outputs are performance factors including knowledge output and knowledge diffusion. Each of these pillars are comprised of several indicators, ultimately leading to a measure of national innovation. Based on this analysis, Karnataka, with its IT capital of Bengaluru, emerged as the most innovative state overall.
But why is it important to understand and measure innovation, specifically in the Indian context? Simply put, innovation is capitalised creativity and is the transformation of creative ideas into economically viable products and services. Innovative and creative economies are rapidly becoming the cornerstones of global economic development, in part due to their distinct emphasis on human creativity, a skill that is not likely to be automated any time soon. It has also been acknowledged that creativity as a skill is hard to teach formally and imbue among students, making it much sought after in employment.
Knowing about what leads to innovation and what results from it is crucial in identifying ways to harness it. To explore some behavioral antecedents of innovative behavior, we collated data from the World Values Survey (2014) and the Global Preferences Survey (2018) - both of which provide gross estimates of various behavioral and economic indicators for nations across the world. We extracted Indian state-wise data on patience, happiness, risk-taking, trust, density of startups, and FDI inflow. All these variables have theoretical or more practical relationships to innovation and/or creativity. Specifically, it is rare for an idea to turn the world around overnight and patience is deemed a virtue in this regard; happiness and subjective well-being have different relationships with creative inputs and outputs at the global level; risk-taking is considered to be an essential element in looking for and finding innovative solutions; trust enables creating an environment where innovation is welcome; and startups and FDIs have obvious links to building creative ecosystems. Our analysis suggests that of these antecedents, only risk-taking, the presence of a startup culture, and extent of FDI were positively associated the the measure of innovation as per the III. This is not the say that the other factors are unimportant, but patience, trust, or happiness were not key ingredients for innovation in the Indian context.
The fact that India is rising in its innovation rankings vis-a-vis other nations is commendable, but what do we have to show for it? There has been tremendous growth in the number of startups working in financial technology, e-commerce, mobile technology, and social impact. But apart from creating value to their shareholders (and therefore the economy), does this innovation translate to social outcomes? To begin to answer this, we looked at state-level performance on the Sustainable Development Goals (SDGs). Ideally, innovation should be positively associated with each SDG, implying that being innovative is not an end in and of itself, but rather contributes to broader development indicators. State-wise performance on the SDGs was sourced from the NITI Aayog SDG India Index (2018). We found that innovation was strongly positively associated with the composite SDG score (see figure below) and with four out of the thirteen goals for which data were available: quality education, affordable and clean energy, decent work and economic growth, and industry, innovation, and infrastructure. The spillovers of innovation into these specific social outcomes is logical, given the III’s inclusion of knowledge workers, human capital, R&D investment, and associated variables in the index.
Figure: IIN-SDG correlations across Indian states
However, it was interesting to note how innovation was not associated with the SDGs of zero hunger, good health and well-being, gender equality, clean water and sanitation, reducing inequality, sustainable cities and communities, and peace, justice, and strong institutions. Further, innovation was negatively associated with poverty eradication and life on land, indicating serious and deleterious innovation gaps. This shows that there is merit in examining innovation beyond its utility to industrial or economic growth. If India’s strength lies in its innovation, then it must have substantial contributions to help meet social goals related to education, health, poverty, and sanitation as well. Future policies can be refined to use existing innovative technologies and inputs as catalysts for meeting socially sustainable goals and outputs.
In order to better understand the process of innovation, we need to redefine not just our measurement of it, but also the framework within which we discuss it. Creativity is integral to innovation, as are other behavioural parameters that our analysis finds. A more holistic perspective on innovation can be achieved through the development of an India Creativity Index, perhaps modelled along the lines of the Global Creativity Index, to identify factors associated with fostering an environment within which innovation can flourish. With the emphasis on creative economies and creative industries only increasing, an “ICI” would help India establish a baseline for creative inputs and outputs, against which progress in these sectors can be benchmarked. With growing emphasis on innovation in India, it is only a matter of time before that we start moving beyond #MakeinIndia to #ThinkinIndia.
Hansika Kapoor and Anirudh Tagat
