History is replete with occasions, where a crisis, often characterized by large-scale loss of human lives, ironically played a role in accelerating the transformation of national economies. The year 2020, clearly destined to be the year of the covid-19 pandemic, has the potential to change it all for India. Japan, which rose from the ashes of carpet-bombed cities in the Second World War provides for an inspiring case-study.
Ravaged by the War, the industrial output of Japan in 1946 dropped to 27.6% of the pre-war level, but miraculously recovered in 1951 and reached 350% in 1960 and never looked back. A series of bold economic reforms and innovative practices at different stages underpinned the miracle. Among others, Japan adopted a “brilliant middle" strategy that emphasized on large, high-value sectors such as automobiles and electronics. Geo-political events around that time aligned well with Japan’s ambitions.
The times were different and the needs have changed. Yet, Japan’s story provides a few lessons that India can emulate in its own way. Japan showed that a developing country, drawing strength from its culture, can construct its own and unique way of development.
The unique tight-knit relationship between government, employers, and employees in Japan, along with their pioneering quality practices made Japanese brands well-known around the world breaking the perception barrier of Asian products. This tripartite nexus based on mutual trust and powered by a single-minded focus on high-quality output should become the identity of the Indian industry. Quality systems for service sectors, inspired by Indian cultural hospitality should be pioneered and institutionalized by India.
With virtually no natural resources, Japan put its youth, especially young women, at the forefront of its recovery after the war. Graduates of transformative engineering schools set up in the war period eventually drove the conglomerates to global success. Even now, continuous skilling, despite full-time employment, keeps the local Japanese manufacturing engine from fizzling out. Just like post-war Japan, 700 million strong Indian youth are India’s most significant natural resource.
Futuristic skilling cannot meet the Indian scale through traditional modules. Indian ed-tech companies are already among the biggest and most digitally advanced skilling institutions in the world.
The government should work with this vibrant tech ecosystem, industries, vocational schools, and universities to leverage virtual reality to impart manufacturing skills to millions of digitally native youth (blended learning), which will eliminate the need for expensive investment in equipment. This will enable industrial skill globalization, where trainers could impart practical skills from any part of the world including Japan.
As the wages rose, Japan feverishly acquired and adopted technologies invented anywhere in the world to upgrade its industry, which led to Japan becoming the first developed Asian economy, sowing the seeds of cascading growth in East Asia (Akamatsu’s flying geese paradigm). For instance, components of lithium-ion batteries were invented in England and the US but commercialized in Japan.
Unlike in the west, the Japanese executives who were not hampered by short-term incentive structures invested heavily in adopting innovation. Taking lessons from this, widespread local industrial innovation every step of the way should become the Indian way of industrialization. This is precisely what made the Indian pharmaceutical Industry a global powerhouse.
To enable technology adoption like Japan, among others, India should also have the most rapid and highly scrutinized intellectual property regime to make Indian special economic zones the most attractive path to the global market by global deep-tech companies.
India and Japan have a unique all-weather relationship in technology partnerships as Japan is the only country to enjoy expedited Patent-Prosecution-Highway (PPH). Similar to the International Solar Alliance, an Indo-French initiative founded in Paris Conference and located in the Indian capital: a joint Asian Patent Office could be a compelling opportunity for an Indo-Japanese initiative.
Indian cities can complement Japanese systems with affordable an English-speaking workforce and infrastructure. Indian Patent Office’s pioneering online hearing coupled with JPO’s experience would mean that an Asian Patent Office, which will gradually accumulate member countries, will be a game-changer for international inventors struggling to navigate IP in interconnected Asian value chains involving dozens of languages. This will eventually make India a gateway for technology globalization that will inspire local companies by getting them exposed more to cutting edge technologies: from the get go.
To summarize, India should skill and innovate at unprecedented scale to get the coveted growth back. Not many would have anticipated that World War III would be fought inside people’s homes and the enemy would be a sub-micron virus. History, enabled by technology, will record with unprecedented detail of the decisions and directions taken by states in 2020. The new normal can and perhaps should lead to a new chapter in the Indian growth story and the length of that chapter will be decided by the weight of our efforts.
Kowtham Raj Velur Sangappillai is currently a team member of the energy and international cooperation division of Niti Aayog. The views here are his own.