The numbers are quite stunning. In 1998-9 the volume of India's software exports was $2.7 billion, in 1999-2000 it was over $4 billion and in 2000–1, from the estimates coming in, it is expected that the exports will be $6.2 billion. This trend has been there for the last eight years—an annual growth rate of approximately 40 per cent. This, given the compounding involved, means that every two years India's exports get virtually doubled. A study by NASSCOM and McKinsey in 1999 predicted that India's exports will reach $50 billion by the year 2008. Since India's total current exports are around $35 billion, and nothing like this has happened in any other sector in India in living memory, these estimates and predictions are giving rise to much scepticism.

Are the numbers a result of jugglery? I myself was initially sceptical, but having checked and compared various sources I am convinced that, give or take a margin of 5 per cent, the figures of the volume of exports are right—the performance in this sector has been spectacular over the last eight or ten years.

What about the forecast? This has met with harsh criticism. One argument has to do with pure deduction. If we assume that India's current export growth rate will persist, it is easy to check that in about sixteen years our exports will exceed our national income (assuming that income also grows at the current rate).

‘The Registrar of Assurances, Government of West Bengal, Kolkata, Office of the Additional Registrar of Assurances III’. As I stand outside the office thus labelled, surveying the milling crowds and waiting for my turn, I have a sinking feeling that I am in a Kafka novel and will never be able to emerge from it.

I had sold a small property some time ago and the buyer asked me to accompany him and his lawyer to the Additional Registrar's Office to have the sale registered. I agreed, partly to be helpful and partly out of curiosity about how the bureaucracy works. That explains my predicament, though the thought of being here all day is beginning to make me regret the decision.

The building complex in Kolkata's office district, where the Additional Registrars' offices are situated, is interesting. There is an L-shaped building, twelve storeys high. On the open face of the L is another building, five-storeyed and crescent-shaped. These two buildings enclose a yard that looks like a truncated D. In that small yard someone has had the sense to plant leafy green trees—palm, and what to my botanically untrained eyes look like giant money-plants.

There are rows and rows of women sitting in the corridors of the crescent-shaped building, signing in people like me who are waiting to have a property transaction registered with the Offices of the Additional Registrar III, and filling in ledgers while taking care not to have their elbows jogged by home buyers and registrars.

The Hindi/Urdu word dosti encompasses greater intensity and devotion than the comparable English term, ‘friendship.’ Bollywood's treatments of dosti entail physical intimacy and a moral code not necessarily shared in friendships between men in the West. Ruth Vanita elaborates, ‘The continuum between romantic friendship and love is a slippery space where affection slides into or is coded as erotic without being overtly depicted as sexual.’ She draws parallels to Hollywood buddy films and remarks that Bollywood representations of dosti are also influenced by ‘older Indian traditions of same sex love.’ Cinematic dosti is a fusion of Hindu mythology, Muslim ghazals, Sanskrit and Parsi theatre, Hollywood cinema and music video. India's economic liberalization in the mid 1990s led to the introduction of satellite television on the subcontinent and a subsequent increase in imported Western pop culture. The shift from dosti as normative homosocial relationship towards the current trend of comic acknowledgement of the homoerotic undertones of dosti is tied to the recent influx of Hollywood film and American television in which homosexuality is a popular theme. Post-2000 depictions of dosti via its coupling with gay jokes is reflective of national concerns about how economic liberalization, the burgeoning middle class, Western style consumer capitalism and diasporic populations impact Indian national and diasporic values, culture and traditions.

An examination of Bollywood dosti films from the 1970s through 2004 demonstrates how the newly queered homoerotic dosti points to a possible national move away from a hegemonic heteronormativity that enforces marriage and reproduction.

Introduction

In a period characterised by increasing internationalisation and transnational political regulation the traditional role of national government in relation to industrial policy and technology policy is challenged. In this context it becomes important to understand which role the public sector has played in the past and can play in the future in relation to innovation and technical change within nations.

In many ways, the central role of the public sector in creating, maintaining and developing modern national systems of innovation is comparable with the one played by a pacer in a bicycle race. If public sector demand in both qualitative and quantitative terms races ahead it loses contact with the innovative capability of national suppliers. On the other hand, if public sector demand slows down too much, national suppliers may slow down their process of renewal and stick to pure routinising. As optimal pacing in a bicycle race requires a mutual understanding between the racing cyclist and the pacer, optimal pacing leading to an upgrading of national systems of innovation requires a mutual understanding between the public and private participants in interactive learning and searching processes.

In many countries the public sector actually tries to play the role of a pacer via technology programmes, public procurement policies, and so on. Sometimes it succeeds, and sometimes it fails or comes out with only modest success.

Theorizing Indian Cinema as a national cinema, film studies have focused on the relationship between popular Hindi films and the Indian nation. Sumita Chakravarty's National Identity in Indian Popular Cinema: 1947–87 set the trend for a number of texts that viewed Indian popular cinema as a cultural system through which the new nation was imagined. Readings of popular Hindi films by scholars such as Ashish Rajadhyaksha, Madhava Prasad, Ravi Vasudevan and Gayatri Chatterjee have called attention to their nationalistic ideology and to their commitment to the nationalistic drive towards modernity and highlighted the role they played in the formation of the Indian citizen subject. Lately, Hindi Cinema, rechristened Bollywood, has begun to attract attention as a transnational phenomenon. Vijay Mishra, in Bollywood Cinema: Temples of Desire, was the first to draw a parallel between the collective experience of reading newspapers creating the sense of belonging to a nation on the one hand and on the other, ‘the way in which Bombay Cinema constructs an Indian diaspora of shared cultural idiom.’ Whether it was ‘a decidedly ideological form’ or whether its ‘catholicity’ was triggered by commerce or not, most studies concur that the simulacra of Hindi Cinema partially facilitated the confirmation, if not the construction, of the Indian nation and Indian modernity. As a consequence, the music of Hindi Cinema, which has evolved its distinctive idiom by blending classical and folk Indian traditions with Western, has acquired the status of national popular music.

Introduction

When the first edition of this book was published 1992, the concept ‘national innovation system’ was known only by a handful of scholars and policy makers. Over a period of 15 years there has been a rapid and wide diffusion of the concept. Giving ‘Google’ the text strings ‘national innovation system(s)’ and ‘national system(s) of innovation’ you end up with almost 1.000.000 references. Going through the references you find that most of them are recent and that many of them are related to innovation policy efforts at the national level while others refer to new contributions in social science.

Using Google Scholar (May 2007) we find that more than 2000 scientific publications have referred to the different editions of this book. Economists, business economists, economic historians, sociologists, political scientists and especially economic geographers have utilized the concept to explain and understand phenomena related to innovation and competence building.

In this paper we argue that during the process of diffusion there has been a distortion of the concept as compared to the original versions as developed by Christopher Freeman and the IKE-group in Aalborg. Often policy makers and scholars have applied a narrow understanding of the concept and this has gives rise to so-called ‘innovation paradoxes’ which leave significant elements of innovation-based economic performance unexplained. Such a bias is reflected in studies of innovation that focus on science-based innovation and on the formal technological infrastructure and in policies aiming almost exclusively at stimulating R&D efforts in high-technology sectors.

‘Is it expected to rain today?’ I ask the liveried porter at our hotel. ‘I’ ‘ope not, Sir’, he replies. ‘I also hope not. But will it rain today?’ I persist, trying to find out the weather forecast. ‘Sir, that is what I am telling you, I ‘ope not.’ I abandon my meteorological quest.

His hope turns out to be true. As we step out for our first day in Lisbon the weather is gorgeous, like the Delhi winters of my student days in the early 1970s, with blue skies and an invigorating nip in the air. Lisbon lies sparkling in the sun, like an old feudal mansion, jaded, gutted, overrun by crowded homes, but still undefeated and proud of its history. Castles jut out from hilltops and splendid marble statues with chipped edges adorn the piazzas.

Our first day is spent walking aimlessly in the city. Alfama, spread along the side of a hill, is a rundown old part of Lisbon, crisscrossed by narrow lanes. There one comes across old women leaning out of windows, chatting with their neighbours across the road, raising their voices freely to counter the sound of the breeze that coasts in from the Atlantic and the flutter of clothes drying on clotheslines flung across the lanes. The lanes give way in places to stairways, where there is a particularly steep slope to negotiate, and then, spectacularly, to the miradours—marble terraces, where the passerby can stop to view the ocean.

Politics is a reason for hope and despair. Al Gore is exemplary of how the politician can disabuse a public fervently engaged in denial. That alone is reason for hope. But Al's political career is passé composé. What about the leaders du jour? With science on the side of stabilizing atmospheric carbon, a new generation can impose the necessary limits. Voters in both the North and South have expressed a strong desire for “change we can believe in.” Is the supply of leaders meeting the demand? Unfortunately, in politics there is always reason for despair. Heads of state will find resilience in the system they campaigned to change; relentlessly, the system will try to change the politicians. The first sign of system resilience is a stream of incoherent messages as the politician transitions from the campaign trail to the seat of power. Pronouncements of fossil fuel exploration and a commitment to stabilizing atmospheric carbon is the doublethink that grips both the North and South.

The saving grace is humor, the scarcest of all resources. A clever turn of phrase can pierce the cold indifference of denial and expose the beguiling incoherencies. By the mid-1970s, the economist and polymath Nicholas Georgescu-Roegen had already surmised the fate of business-as-usual:

Bollywood, or Bombay Cinema, or Indian Entertainment Cinema went global in 1995, with Aditya Chopra's Dilwale Dulhaniya Le Jayenge (The True of Heart Will Win the Bride). DDLJ, as the film came to be called (in the 1990s' style of abbreviating long Bollywood titles), outperformed Maine Pyaar Kiyaa (I Have Loved, 1989) in the box office which in its day had outperformed the long-time record-holder Sholay (Flames, 1975). In DDLJ, the Non Resident Indian (the NRI), hitherto portrayed in Hindi films as the marginal outsider with affected speech and behavior was redeemed and validated as not just a possible Indian national subject, but possibly one of the best. This film had a storyline highly unusual for its time. Baldev Singh, a Punjabi storeowner in England returned to India to marry off her daughter Simran to a native Indian Punjabi. The daughter had already had a brief romantic encounter with a Punjabi British man named Raj, and was determined to marry him. But Raj, who then followed Simran and her family to India, would marry Simran only if she was ‘given away’ in the ‘traditional Indian way,’ by her father Baldev Singh. Baldev's impression of Raj from a brief encounter was that of an irresponsible individual with no sense of ‘tradition,” someone who was just not ‘Indian enough’. But as the narrative unfolded, Raj proved his ‘worth’ and Indian-ness to Baldev, ‘won’ the bride, and the film ended with the newly-weds returning to England, as Indians as they ever were.

On the 5th of March 2009 I signed a contract with the United Nations Development Programme to be the general evaluator of the Yasuní-ITT Initiative. Yasuní is a UNESCO Biosphere Reserve and a National Park in the Ecuadorian Amazon. Within the park live two indigenous communities who have chosen voluntary isolation, the Tagaere and Taromenane. Below the Park lie the oil fields Isphingo, Tambococha and Tiputini, abbreviated as ITT. Upon learning of just these bare bone facts, I quickly realized that I have been thinking about the economics that justifies the Initiative for almost my entire professional career – long before I knew where Yasuní is and what it will mean for humanity. Drawing on my previous trajectory in the areas of non-equilibrium thermodynamics, biodiversity, and ecocriticism, I offer this short book as the “product” of the consultancy. However, I hope that it will also be an invitation to delve deeper into the arguments referenced in the notes and filmography.

Because climate change is the leading issue of our day, the book is contextualized in the events that transpired from the first of March 2009 to the first of July 2009. These include the G-20 Summit in London, the passage of the “Clean Energy and Security Act of 2009,” the Fifth Summit of the Americas in Trinidad and Tobago, the negotiating session in Bonn of the Fifteenth Conference of the Parties to the United Nations Framework Convention on Climate Change, the formal US recognition of greenhouse gases as pollutants, and the passage of the American Clean Energy and Security Act.

A philosopher I admire greatly is Pyrrho of Elis, c. 360–270 BC, arguably the father of scepticism. Can we ever completely trust what we perceive? Since all that we perceive and learn we do through our own senses, is it not an act of foolish arrogance to have so much confidence in the senses? A good philosopher must, therefore, always entertain doubt: so argued Pyrrho. And he tried to live by his philosophy. Diogenes Laertius, the third-century writer famous for having written the world's first scissors-and-paste textbook, records how, when a ship in which Pyrrho was travelling was caught in a big storm, only two creatures aboard were completely at peace—a pig and Pyrrho. Presumably, the former saw no reason to expect calamity from the fact of a stormtossed ship. Indeed, Diogenes Laertius suggests, Pyrrho may even have been a bit envious of the pig, for the pig was not just calm: unlike Pyrrho, it continued to eat.

Given his scepticism, Pyrrho wrote nothing during his ninety long years, for he deemed nothing fit to be immortalized by ink. His philosophy was spread entirely through what he spoke. It is believed that he went to India with Alexander's army and there met some Indian sages who not only believed in writing nothing but had taken a vow against speaking too. Pyrrho came back chastened by the realization that there were others ahead of him in the practice of scepticism.

Introduction

Joseph Stiglitz's book, Globalization and Its Discontents (2002) defies easy categorization. It is, in part, an academic monograph meant to be read by professional economists and the serious graduate student; but it is also, in part, a diatribe against the injustices of global finance and politics. It is written at times from the ivory tower, contemplating the vast panorama of international economic relations with a researcher's trained but distant vision; but it also reads in places like a rabble-rousing call from an activist who has no time for the niceties of models and regressions. With a title that rhymes with Sigmund Freud's classic monograph, this is also a book where an academic, who has done pioneering work in his field, cuts loose from the binds of his discipline and assesses the world with passion, concern, and also disappointment.

It is the disappointment that makes this such a compelling book. Stiglitz has seen it all. In 1993 he moved out of the groves of academe to join President Clinton's Council of Economic Advisors. From there he went to the World Bank as Senior Vice President and Chief Economist. Popular globally for championing the cause of the disadvantaged and dispossessed and for not holding back on criticizing the US Department of Treasury and the IMF, he became unpopular in the bastions of power in Washington for these very reasons.

Some Initial Questions

As argued by Johnson in chapter 2 of this volume, learning ‘is the basic force behind technical innovation’. Learning is moulded by the operation of institutions reflected in the regularities of behaviour, which can be observed at different levels of aggregation within the economic system. This chapter focuses on the process of learning at the micro level with reference to the relationship between learning and work organisation and argues that the processes of intra-firm learning are contingent upon the type of work organisation in which learning takes place.

In order to evaluate the validity of this argument, one must ask: What are the institutional configurations of the type of work organisation in question, and to which type of learning do they relate in a contingent manner? Exploring the answer to this question is not at trivial matter, neither theoretically, nor empirically. Firstly, the answer cannot be obtained solely on the basis of the conceptual framework developed in part I of this volume, because the question touches upon issues requiring the application of organisation theory. However, this is not a problem, but an opportunity of inter-disciplinary cross-fertilisation, which will penetrate the discussion in this chapter. Secondly, the answer depends, obviously, upon the character of the specific case we are investigating. And thirdly, the question can be posed at several levels of aggregation, and the perspective need not be restricted to an individual firm or an operating unit, but may easily incorporate the most common principles of work organisation within an industry, a production system, or even a national system of innovation.

Introduction

One of the most important institutional conditions for the process of innovation is the possibility of financing the process. This is not just a question of getting finance cheaper in one country compared to another. Rather there are some national, institutional factors in financial systems, which are important to firms, when they need to obtain finance for their investments in new technology. One might argue that the concept of a national financial system has apparently become less and less relevant due to internationalisation, deregulation and globalisation of financial markets in recent years. However, in spite of these trends there are still differences in the financial systems which are crucial to take into account.

Risky investments in innovations are often initially financed internally. This goes especially for large companies, whereas small and medium sized firms may have less possibilities for self financing. However large companies also increasingly tend to use external finance. Higher R&D costs and shorter life cycles for most high technology product, make technology based firms more dependent on external finance. Underneath this very general statement however there are important differences, not only between the financial strength of firms, but also between countries. In some countries there is a stronger tendency to finance investments internally, and this makes firms less dependent on external finance.

In the following discussion the focus will mainly be on external finance. My main purpose is to show that institutional differences between national financial systems are important to financing innovation.

Nineteen Eighty-Four should be required reading for anyone who votes. Through a tale of totalitarian dystopia, George Orwell shows how the State can distort language for its ever shifting purposes. “Doublespeak” is one of the neologisms of the novel that has entered the vernacular. What exactly is it? According to William Lutz, professor of English:

Despite the gravity of the phenomenon, humorous examples abound. For example, The Quarterly Journal of Doublespeak reports a vote by the Minnesota Board of Education “…to consider requiring all students do some ‘volunteer work’ as a prerequisite for High School graduation.” We can all laugh. But there is nothing laughable when, say, the US government refers to the drowning of prisoners denied habeas corpus as the “waterboarding” of “detainees.” Doctors were on duty to perform tracheotomies if necessary.

In the spectrum of doublespeak, I am tempted to locate the “market failure” of economic theory somewhere between the “volunteer work” mandated by the Minnesota Board of Education and the “waterboards” authorized in the Bush Administration Torture Memos.