Page 299 - ES 2020-21_Volume-1-2 [28-01-21]

282 Economic Survey 2020-21 Volume 1

8.58 India should focus on improving its performance on institutions and business sophistication
since higher performance on these dimensions seem to consistently suggest higher innovation
outputs performance (Tables 1-3). The importance of institutions for innovation is consistent
with an emerging literature that emphasizes the same (see Acharya and Subramanian, 2009;
Acharya et al. 2013, 2014, Sapra et al. 2014). Table 4 highlights some areas that India could
focus on within the institutions and business sophistication input pillars to further augment its
performance in innovation outputs.

Table 4: Suggested Focus Areas for boosting Innovation Performance

Input Pillar and Potency Build on strengths Improve
of Expected Impact

Institutions • Ease of resolving insolvency • Ease of starting a business
(rank 47) (rank 105)
Potency of potential impact:
One standard deviation • Government effectiveness • Political and operational
improvement in Institutions (rank 55) stability (rank 83)
rank from 61 in 2020 to 23 is • Regulatory quality (rank 84)
expected to increase overall • Rule of law (rank 62)
Innovation Output rank to 40 • Cost of redundancy
from 45 in 2020
dismissal (rank 61)

Business Sophistication • Intellectual Property • % of Females employed
payments as % of total trade with advanced degrees
Potency of potential impact: (rank 27) (rank 101)
One standard deviation
improvement in Business • High-tech imports as % of • FDI net inflows as % of
Sophistication rank from 55 total trade (rank 29) GDP (rank 92)
in 2020 to 17 is expected to • % of Firms offering formal • % of Knowledge intensive
increase overall Innovation training (rank 37) employment (rank 90)
Output rank to 42 from 45 in • State of cluster development
2020 (rank 37)
• Research talent, % in
business enterprise (rank 38)
• University/Industry research
collaboration (rank 45)
• JV-strategic alliance deals/
bn PPP$ GDP (rank 47)
• Patent families 2+ offices/
bn PPP$ GDP (rank 47)
• % GERD financed by
business (rank 48)

8.59 As Economic Survey 2019-20 discussed in the chapter “Entrepreneurship and Wealth
Creation at the Grassroots”, the Startup India campaign of the Government of India recognises
entrepreneurship as an increasingly important strategy to fuel productivity growth and