In the intricate tapestry of India’s economic landscape, the latest government survey serves as a brushstroke, delineating a transformation in consumer spending that beckons both curiosity and concern.
In 2019, the World Intellectual Property Organisation (WIPO) reported that China accounted for almost half of the world’s patent filings, with India also registering an impressive increase in global patent production. “Asia has become a global hub for innovation,” said the WIPO Director-General Francis Gurry.
Academics Dany Bahar, Prithwiraj Choudhury and Sara Signorelli ~ who have studied the path followed by developing nations such as China and India in becoming innovation hubs ~ have a one-word answer to explain this phenomenon: Mobility. This is bad news for those pushing nativist agendas but a welcome addition to the growing pool of evidence which shows that research and development (R&D), innovation, and the subsequent outcomes for multinational corporations (MNCs) are tied to liberal immigration policies. Just a few decades ago, emerging markets constituted a negligible share of global patent production.
But by 2018, according to the US Bureau of Economic Analysis (BEA), as multinational enterprises began to conduct innovation more globally, the 20-year growth rate of R&D activities of US companies in foreign countries ~ estimated to be six per cent ~ exceeded the growth rate of R&D within the USA, estimated at four per cent. Patents filed in 15 countries from 1995 to 2016 constitute the sample of the research paper published by Bahar, Chowdhury, and Signorelli.
Inventors in countries such as Japan and Germany ~ the leaders in patent production among that group ~ filed close to 80 per cent of all patents in 1995. By 2015, their share had halved, while inventors in emerging markets such as China, India, Taiwan, and South Korea, represented a much larger share of patents in 2015 than they did in 1995. Human mobility has emerged as the most important driver of this pattern. The main findings of the study are that pro-business migration reforms significantly increase the number of patents filed by an MNC within a country, while the opposite is true for policies deterring business-related migration.
Negative reforms also decrease the quality of the patents filed across several criteria and significantly decrease the share of global patents filed by subsidiaries in the country that implemented such policies. Positive migration reforms, on the other hand, substantially increase the share of global patents filed in countries with low initial shares of knowledge production. This suggests that policies affecting human mobility have contributed to the shift in the geography of innovation towards emerging markets.
The slowdown in international mobility caused by the Covid-19 pandemic or by governments such as that headed by former US President Donald J. Trump enacting reforms which deterred immigration has come at the cost of less innovation and has hampered economic growth and prosperity. There is a strong business case for governments to push for more immigration, not less