By Amir Ullah Khan & Pooja Sanghani
Mokyr, Aghion and Howitt won this year’s Nobel Prize in Economics for their work on the innovation ecosystem that enables countries and societies to grow and prosper. They argue that long term growth comes from sustained innovation that replaces the old with the new and enables a marketplace for ideas. Scientific reasoning and cultural openness ensure that random inventions are transformed into continuous technological and economic progress.
As India seeks to expand its global footprint, the question is no longer only how much the country spends on research, but whether its universities create ecosystems that enable continuous and sustained innovation. Universities sit at the centre of modern knowledge economies. They generate ideas that shape industries, encourage curiosity and debate, incentivise problem-solving approaches, influence public policy, and drive technological progress. But strong research ecosystems require more than talent and ambition. They require infrastructure — laboratories, faculty networks, doctoral training, and crucially, stable financial capital that allows universities to pursue inquiry across decades rather than short funding cycles.
India currently spends about 0.7 percent of its GDP on research and development. By comparison, the United States spends more than 3 percent and China over 2 percent. Public funding has long been the backbone of India’s research system, but government budgets alone cannot sustain the scale of scientific exploration that modern innovation economies demand. Globally, universities that produce breakthrough research operate within a broader financial architecture. Alongside public funding and tuition revenue, they rely on a third pillar that has become central to leading research institutions: endowments.In leading universities, endowments function as long-term financial infrastructure. Philanthropic contributions are invested, and a portion of the annual returns supports laboratories, faculty positions, doctoral fellowships, and new fields of inquiry. This structure enables universities to invest in research that may take years, even decades, to mature. These endowments are not earmarked for specific, short-term outcomes. They are meant to create an atmosphere of enquiry, experimentation and innovation.
The scale of such institutional capital is striking. Harvard University manages an endowment exceeding $50 billion, while Yale and Princeton oversee endowments of more than $40 billion and $35 billion respectively. Income from these funds supports a significant share of academic activity and allows sustained investment in emerging research areas. Industry also promotes research and development, but those outlays are specifically meant to solve particular problems and are proprietary in nature.
Philanthropic capital, freed from the need for specific solutions, has often played a catalytic role in building research capacity. At Harvard, a philanthropic gift helped establish the Wyss Institute for Biologically Inspired Engineering, a cross-disciplinary centre working on genome engineering, synthetic biology, and biomedical technologies. Within a short period, the institute has produced major scientific breakthroughs and spawned start-ups translating academic discoveries into real-world technologies.
Such financial flexibility is critical. Universities dependent on tuition revenue or short-term grants often prioritise predictable programmes and incremental work. Endowment income allows institutions to recruit global faculty, build advanced research infrastructure, and pursue high-risk research with transformative potential.
Over time, this creates a virtuous cycle. Strong research environments attract talented faculty and doctoral scholars. High-quality research strengthens institutional reputation and draws further philanthropic investment, reinforcing the university’s capacity for innovation. India’s higher education system already offers early signs of how such financial structures can reshape research institutions.
Public institutions such as the Indian Institutes of Technology demonstrate the impact of sustained government investment in building globally respected centres of engineering education and research. Increasingly, IITs and the IIITs are also attracting substantial philanthropic contributions from alumni and institutional donors to support research centres, endowed faculty positions, and advanced laboratories.
Private universities illustrate another pathway. Azim Premji University, Ashoka University and a few others founded through philanthropic support from entrepreneurs and philanthropists have rapidly built strong academic ecosystems centred on the liberal arts, sciences, economics, and public policy. Philanthropic investment has enabled faculty recruitment from leading global institutions and the creation of interdisciplinary research centres addressing complex economic and societal challenges.
India’s philanthropic landscape is evolving rapidly, creating an opportunity to build long-term institutional capital in higher education. The India Philanthropy Report 2026 estimates that philanthropic contributions could exceed ₹1.4 lakh crore annually in the coming years. If even a modest share of this capital were channelled toward professionally governed university endowments, the impact on India’s research ecosystem could be profound.
Universities are among the most important drivers of productivity growth in modern economies. When they possess stable institutional capital, they can invest in research that shapes industries and public policy for decades. For India, the opportunity is not simply to expand philanthropic investment in universities, but to build the financial foundations that will power the country’s next generation of research and innovation.
Mokyr’s prescription for innovation and success fits perfectly in this emerging collaboration between private philanthropy and university research. He showed how the preconditions of long-term growth in industrialised European nations enabled their progress. Our universities are the institutions that build intellectual capital, are freed from bureaucratic hurdles to experimentation, actively encourage dissent and different opinions and most importantly, catalyse multidisciplinarity and knowledge flows across schools and departments. Philanthropy must take this forward to allow new ideas to emerge, research to grow and long-term growth to get established.
Amir Ullah Khan is a Civil Servant, Development Economist, and Visiting Professor at the Indian School of Business. He has previously worked at the Bill & Melinda Gates Foundation as Deputy Director and at Encyclopaedia Britannica as Executive Director and Editor. Dr. Khan is currently a Member of the Telangana Public Service Commission and a Member of the Government of India’s Technical Advisory Committee on Prices and Cost of Living.
Pooja Sanghani is Vice President at the IIM Bangalore Development Foundation. She has previously worked at IIM Ahmedabad and CEPT University, where she helped establish endowment and institutional advancement frameworks linking philanthropy with long-term academic and research priorities. She has also worked at EY advising governments on infrastructure policy and regulatory bottlenecks and is trained as an urban planner from CEPT University.
DISCLAIMER: The views expressed are solely of the author and ETEDUCATION does not necessarily subscribe to it. ETEDUCATION will not be responsible for any damage caused to any person or organisation directly or indirectly.
