At an event on Capitol Hill, which featured Congressman Ami Bera, ITIF discussed proposals designed to boost Indian productivity and innovation based on its report, The Indian Economy at a Crossroads.
We're Number 2: What Happens When China Surpasses the United States as the World's Largest Economy?
Last week, the World Bank released new calculations of countries’ GDP based on purchasing power parity (PPP) data suggesting that China is poised to eclipse the United States as the world’s largest economy later in 2014—a significant acceleration from its previous prediction that China’s economic size would surpass that of the United States in 2019. While some have argued that this news offers no cause for worry (because U.S. per-capita incomes remain much higher), there are actually several compelling reasons why this news should be concerning. First, it provides further evidence that the U.S. economy is significantly underperforming its potential. Second, it would be one thing if China’s rapid economic growth were occurring with the country abiding by the tenets of the rules-based multilateral trading system, instead a not insignificant share of China’s economic growth has been fueled by innovation mercantilist practices. Third, as the United States slips from the global economic pole position, it will be relatively less able to wield influence over and to shape the global economic system on terms most favorable to it. In short, the United States should not look forward to the day it’s no longer the world’s largest economy, and should rather compete fiercely—including by enacting a range of pro-innovation economic growth policies—to maintain its leading position.
Restore the Indian Economic Miracle by Attracting Foreign Investment
Two decades of robust economic growth that gave rise to the so-called “Indian Economic Miracle” have been replaced by ever worsening stagnation over the last several years: in 2013, Indian labor productivity growth (2.4 percent) and GDP growth (4.4 percent) sank to their lowest levels in over a decade. Unfortunately, Indian policymakers have increasingly reacted to this situation by embracing “innovation mercantilist” policies designed to promote domestic industries at the expense of global trade partners. Yet while these policies may appear beneficial by boosting domestic production in the short-run, ultimately they are likely to prove counterproductive, by hampering investment by companies in India, lessening India’s attractiveness as a location for foreign direct investment, and engendering retaliatory measures by other nations. A far better plan would be to adopt an attraction—not a compulsion—strategy in trying to bring globally mobile investment and production to India’s shores, while at the same time ensuring robust domestic competitive markets.
2014 Special 301 Report Highlights Continuing Concerns over India’s Protection of Foreign IP Rights
The United States Trade Representative’s 2014 Special 301 Report both placed India on its Priority Watch List and announced an out-of-cycle review for India, meaning that USTR will undertake an additional review of India’s intellectual property rights (IPR) protection and enforcement policies in the fall of 2014. While the report commended India for making “some improvements in its IPR legal framework and enforcement system” it noted that “IP protection and enforcement challenges are growing” and that “serious questions regarding the future of the innovation climate in India across multiple sectors” including the life sciences, renewable energy, digital content, and information and communications technology product sectors. The report highlighted compulsory licensing, patent denials and revocations, copyright and piracy, counterfeiting, localization policies, and difficulty protecting trade secrets as particular challenges in India’s intellectual property environment.
Reviewing USTR’s 2014 Special 301 Report
The 2014 Special 301 Report highlights the continuing threats global U.S. intellectual property rights holders’ face around the world. The citation of 37 countries denotes the importance of additional trade remedies to adequately enforce and protect the rights of U.S. businesses and innovators abroad.