China and India Lack “Software” and the Decline of American Competitiveness Is Overstated

So says the Council of Foreign Relations’s Adam Segal in his new book, “Advantage: How American Innovation Can Overcome the Asian Challenge.”

Adam Segal


Everyone these days seems to be talking about the rise of Asia over the West and the decline of America’s competitiveness. Few people would probably use the words “hardware” and “software” in those conversations. Adam Segal of the Council of Foreign Relations, however, has a new framework for thinking about the East-West innovation competition–which he details in his recently released book, Advantage: How American Innovation Can Overcome the Asian Challenge–and it indeed involves a discussion of software and hardware.

While other scholars and practitioners focus on “hardware” achievements, such as number of patents and scientific publications, Segal says that the “software” of the rising countries of China and India is actually under-developed and is where the United States has a competitive role to play. Software, in Segal’s book, is a metaphor that refers to social capital, connectedness, and collaborations between governments, institutions, and universities. It touches cross-cultural alumni networks and the high numbers of Indian and Chinese students who were educated in the United States.

“The Chinese and Indians are actually envious of the connections we have in place in the United States,” Segal tells Fast Company. In his research, Segal spent extensive time on the ground interviewing people in China and India about their feelings toward the global innovation race.

“When you talk to people in China they talk about the true barriers for innovation,” says Segal. “Some patents have nothing to do with breakthroughs. China’s published papers are on the rise, but they’re not cited globally. And there’s lots of reports coming out about China’s plagiarism.”

Segal says the important aspects of “software” to focus on are “social capital, tolerance for risk, willingness to leave jobs, ability to criticize superiors, the regulatory environments.”

People often ask about the numbers of engineers in a country. But, “I don’t think that’s the right debate to have,” says Segal. “The question is more–what skills do those engineers have? Do they have interdisciplinary training?”


Segal cites the examples of Austin, Texas, and Silicon Valley as having interdisciplinary networks of collaboration and the strength of those networks is what makes the United States more competitive than some may realize. And it’s that strength that is making our competitors envious.

“This is a re-framing. It’s often framed that the rise of China and India is a threat to the United States, but the U.S. is well positioned to take advantage of this. It’s not a game or a battle. This is going to create lots of opportunities.”

Follow me, Jenara Nerenberg, on Twitter.

[Image credit: Matt Richman]


About the author

Jenara is an overseas reporter for Fast Company and a freelance writer/producer in Asia, regularly on CNNGo, and a graduate of Harvard and UC Berkeley.