We must recognise that as the global market for talent tightens, the international companies will turn to India (and possibly China) to meet their requirements. This will, no doubt, be a positive for the individuals. But it will make the attainment of energy security more difficult. This is because EP of hydrocarbons is becoming technically and logistically more difficult and because the commercialisation of solar, wind and biofuels requires a technological breakthrough. A deficit in our technical human resource base will compound an already major supply side challenge.

The second explanation has to do with the utilisation of technology. Gregory Clark has in his book A farewell to Alms shown that while a necessary condition for sustained performance success is the availability of technical expertise and technology, the sufficient condition requires that technology be efficiently utilised. Clark has gathered a wealth of information on the comparative performance of countries and industries over the 100-year period since the Industrial Revolution. One set is of particular interest. It highlights the performance of the cotton and railway industry across several countries, rich and poor, over the period 1870-1913. The data shows that the divergent performance of these two industries was not on account of lack of capital or technology. It was because of differences in the efficiency with which local management utilised the technology.

All countries had access to broadly similar cotton technology. This was because England, which had made the greatest advancements in cotton production, was not hesitant to export the latest technologies, including the machines that embedded the innovation. All countries had also access to relevant technical expertise and there was no constraint of capital. In such circumstances, poorer countries like India with access to abundant low wage labour should have replaced England as the leading low cost producers of cotton and yarn. They had similar machines and a wage cost advantage. This did not, in fact, happen. The major competitive challenge to England came, in fact, from other high wage nations like Japan, Italy, France and Germany. Clark’s data shows that the reason for this somewhat counter-intuitive outcome was the comparative efficiency in the utilisation of technology. The Indian cotton industry was miserably inefficient. The extra labour that they had hired because of the low wages generated no extra output. Their initial wage cost advantage was soon wiped out by the higher wage bill. The situation was the same with the railways.

... contd.