Toronto - The Institute for Competitiveness (the Indian partner of the Institute for Strategy and Competitiveness at the Harvard Business School) and the Martin Prosperity Institute founded the Prosperity Institute of India (PII) in September 2012. As a partner, MPI and the PII engages in research and publishes Insights, research reports, academic papers, and working papers with the objective to help enhance the current and future prosperity and competitiveness within India, with a specific focus on examining the role of creativity and the Creative Economy. It is important for a creative analysis of India to take place, as despite having one of the largest populations and economies in the world, there are many common misconceptions and unknowns regarding India, highlighting the need for an in depth analysis of the data available. We here at the MPI have worked to start this examination with the release of our first India report. By looking at the Creative Economy in India at the State level, this Insight presents a small section of our results: the Creativity Index within the States and Union Territories in India.
Richard Florida’s measure for economic potential, the Creativity Index is outlined in Rise of the Creative Class and Rise Revisited along with numerous MPI Insights, working papers, and reports. The Index combines the three T’s (Talent, Technology and Tolerance) to help determine a region’s economic potential and ability to attract and retain the Creative Class. For a complete explanation of the Index, please follow this link. For this report we modified the 3Ts based on the data available for India as well as specific factors unique to the country. The following metrics were used to measure each of the 3Ts; Tolerance: Mosaic Index, Religious Herfindahl Index, percentage foreign born, and rural/urban literacy ratio; Talent: Creative Class share and degree share; Technology: tech connectivity, tech education, and computer access.
A common misconception held regarding India is the notion that the Information and Communications Technology sector of the labour force is the primary driver of the economy. By analysing India in regards to the 3Ts of economic development, we aimed to examine what aspects of Talent, Technology, and Tolerance are driving India’s economy, across different locations. Exhibit 1 presents the Talent, Technology, and Tolerance indices for the 5 States and Union Territories (UT) that were found to have the highest overall Creativity Indices in India and the 5 with the lowest. As presented in Exhibit 1, Delhi was found to be the State or Union Territory with the highest Creativity Index in India, due largely to the region’s strong performance on our Technology and Talent Indices. What is also apparent in Exhibit 1 is that while generally the top 5 States or Union Territories had either a high Talent or Technology Index (or both); they usually held a lower Tolerance Index. The most troublesome assertion that can be made when looking at Exhibit 1 is the polarization that exists between the economic potential of different States and Union Territories, as the difference between the top and the bottom is quite stark. While the 5 States and Union Territories with the highest Creativity Indices have an average Creativity Index of 0.88, while the bottom 5 have a substantially lower average of 0.12.
Exhibit 2 presents the Creativity Index for each State and Union Territory within India according to how they score. The darker the shade of orange indicates a higher Creativity Index while the lighter the shade of orange indicates a lower score on the Index. At first glance, what stands out the most is the large geography covered by the States and Union Territories that scored the lowest on the Creativity Index. This central region encompasses the States and Union Territories with the lowest Creativity Index, as a ring is created around them. In contrast to this region, the areas that rank the highest on our Indices are spread out in different geographical locations of the country, as opposed to being clustered together. The States and Union Territories that have a Creativity Index near the median in India are also spread out, but they usually surround at least one of the regions found to have a high Creativity Index. Illustrated in Exhibit 1 was the large disparity between the most and least creative regions in India, and Exhibit 2 presents that this disparity is also apparent in geographical scale. The States or Union Territories with the highest Creativity Index are smaller, more compact and dense regions, while the areas with the lowest Creativity Index are many of the geographically largest areas. Not only are these regions geographically large, but they have large populations as well. Each light orange area combined to a population of over 545 million people, or 45% of the country’s total population. The regions with the darkest shade and highest Creativity Index bracket, present the opposite, as together these regions only attribute to about 6.7% of the total population. Many of the greater populated rural States compared to the lesser populated urban States presents a divide within the country, in which urban locations seem to have much greater economic potential.
We here at the Martin Prosperity Institute have examined the Creativity Index of many regions, as it allows us to gauge the economic potential of places to succeed within the knowledge economy.This Insight has presented our results for India, highlighting a great divide within the country between the economic potential of rural and urban areas. While this divide exists, there are many States and Union Territories found to be within the middle of the pack, in which there is a capacity to increase economic growth by developing the 3Ts locally. This report will be the first in a series, as the MPI aims to better understand how all regions around the world can work towards prosperity in the knowledge economy.