May 2006

A joint survey by Foreign Policy magazine and The Fund for Peace on ‘Failed States’ was unveiled recently. The “Failed States Index” puts Pakistan at number nine, or in other words Pakistan is seen as the ninth most likely country to fail.

The survey, which is based on “data from more than 11,000 publicly available sources collected from July to December 2005″ and tracks 12 socio-economic and political factors, puts Pakistan one rank above Afghanistan. That is reason enough to doubt the results of the survey.

2005 was a traumatic year for Pakistan with insurgency gaining ground in the west, a massive earthquake that destroyed parts of its north-west, continued sectarian violence in Karachi and of course the continuing rule of the West’s favorite military ruler – General Pervez Musharaff. All these factors were enough to make Pakistan lose ground from its relatively safe 34th position last year, to the shaky 9th this year. The report itself counts the earthquake as the chief reason for the decline.

India’s neighborhood it seems is getting very unstable. Burma, Bangladesh and Nepal are consecutively placed at number 18, 19 and 20 respectively on the scale. If the data from the current year was to be included, I believe Nepal would surely make it to the top 10. Sri Lanka of course is simmering again and is likely to lose ground from its current ranking of 25.

The surrounding instability in the neighborhood may affect India critically if one or more countries see a prolonged conflagration. Let me refine this hypothesis a bit – there is encouraging evidence that a country can withstand chaos in the neighborhood. Take for example South Africa, which borders Zimbabwe and has seen massive flow of immigrants from the country. On the other hand, Nepal’s resurgent Maoist movement may find support in the beleaguered northeast areas on India and the impoverished villages around Himalayan region. Similarly any problems in Bangladesh may set off an even wider wave of immigrants looking for security and economic opportunity in India. There is already wide-spread anger against Bangladeshi immigrants in part of North-east and any spurt in immigration is likely to set off violent demonstrations.

While prognosis for long-term stability in South Asia seems bad, things aren’t particularly hot for East Asia either. Among the other countries that saw a precipitous ‘rise’ in the rankings over the past year include China, which on the basis of its “87,000″ peasant strikes lost 10 points to clock in at 57th.

The Wall Street Journal (WSJ) ran an opinion piece yesterday arguing that the reason why India is “rapidly evolving into Asia’s innovation center” and “leaving China in the dust” is because of India’s famed Intellectual property regime.

Not only is the above claim ‘patently’ bogus, but I believe the alternative is true – that the Indian innovation is surviving primarily through piracy. Then we have to address whether “China is being left in the dust”, and surely that would be very difficult to prove.

But first, let me focus my attention on India’s so-called success story in copyright law. It is, of course, very clear that the authors of this article have never ventured to Palika Bazaar or to Nehru Place in Delhi or to the countless other entities that use and sell pirated material throughout India. Nor have the authors ever read an Indian science book for all they will find is hasty copies of works by foreign authors on poor paper. Nor of course have they ever been to an Indian store in the US. For over the seven or so years that I have been in the States, I have yet to see a rightfully purchased Bollywood movie; Indian stores as a rule carry jitter-prone pirated copies produced on substandard equipment.

Yes, India has a wonderful copyright law. At least so the gentlemen would like us to believe. However, it is really hard for me to imagine that it is ever enforced. Surely the authors quote the number of times police have successfully prosecuted copyright violations in India. Well, maybe not, for they were too embarrassed to quote the lowly figure of zero in the past.

The WSJ article points out that in 1994 the copyright act was amended to explain the rights of holder and penalties for infringement. “In 1994, the Indian Copyright Act was amended to clearly explain the rights of a copyright holder and the penalties for infringement of copyrighted software.” Nowhere does the WSJ article mention that the act itself was rewritten to make it tougher. The only effect of the law, which the article mentions has been called one of the “toughest in the world” (without of course quoting sources), was to create this handbook.

Since the implementation of a copyright law that was “one of the toughest in the world”, a government study on copyright piracy in India done in 1999 concludes, “The total value of pirated copyright products sold in India during 1996-97 was about Rs.1833 crores which formed 20% of the legal market. Segment wise, the piracy rate is found to be the highest in computer software (44%) and lowest in cinematographic works (5%).”

So moving on to the authors’ contention that India is leaving behind China in dust, the authors use the following line to support such an exaggerated claim, “The number of Indian patent applications filed has increased 400% over the past 15 years.”

Aah, the wonders of statistics.

So let me put the numbers in perspective. “According to the World Intellectual Property Organization’s (WIPO), the number of international patent applications from Japan, Republic of Korea, and China, has risen by 162%, 200% and 212%, respectively, since 2000. These growth rates reflect the rapidly growing technological strength in north east Asia.” More instructively, China in 2004 filed for 1705 patents while India filed for 689. [PDF - WIPO statistics]. Let me just make one more comment about China – Chinese economy (and innovation) with annualized growth rates of upwards of 9% and with high tech stalwarts like Lenovo is flourishing. Any comments as to leaving China in the dust can’t just be called wrong, they are either dumb or deliberately incorrect.

Let me finish this piece by focusing on how piracy has helped India innovate. Without the countless street level computer training centers which mostly rely upon pirated software, there wouldn’t have been an IT revolution in the country. Without the lax patent laws on Pharmaceuticals, which patented only the way in which a medication is produced and not the mix of ingredients itself, there would have been no Indian success story in Pharmaceuticals. Without the cheap knock-off science books that are abundant for poor Indian students, there wouldn’t have been the countless educated Indians with a high level of understanding of fundamentals of science.

Lastly, I would like to address the question of why this poorly researched article trumpeting fake achievements and rationale for India’s success has made it to the Wall Street Journal. My guess is that this is a deliberate piece, produced after much ‘deliberation’ with the ‘businesses’. It comes as no surprise that one of the authors of the article, Mr. Wilder is a lawyer representing the euphemistically named IP lobbying Association called the ” Association for Competitive Technology”.

Copy on and succeed!