The only thing a Bachelor's Degree in Computer Science did for Amit Nanavati was make him overqualified for most of the available jobs in his hometown of New Delhi. So he did what many ambitious Indians did in the late 1980s: he went to the United States for graduate school. The move worked wonders on his career. As soon as he finished his Ph.D. at Louisiana State University in Baton Rouge in 1996, a fast-rising start-up called Netscape snapped him up. Nanavati would have preferred to go back home to India, but figured he'd have an even tougher time marketing himself. He was mistaken. In the time it took him to get his degree, career prospects for engineers and scientists in India had brightened considerably. By 1998 he found himself back in New Delhi, as a researcher at IBM's new lab, where he's been ever since. "India is the right place and this is the right time," he says.

These are indeed boom times for research in Asia. U.S. and European corporations, in an effort to get closer to their overseas markets, are pouring money into the bigger Asian countries like China and India. And governments are falling over themselves to entice them, investing billions in their own universities and big corporate-research parks, like Singapore's Biopolis.

The burning question, though, is to what extent Asia will be able to turn this unprecedented investment in intellectual resources into a true engine of innovation. So far, the rise of Asian R&D is only skin-deep. Asia may boast some topflight talent, but the best Ph.D. s are still trained in the United States, say corporate-research executives. It's difficult to say who will emerge as big winners. China's rapid growth allows it to attract more investment from foreign firms, but its researchers struggle under a Soviet-style autocratic culture that doesn't lend itself to the freewheeling exchange of ideas. In this regard, India's British influence may have served it well, but scientists often face red tape.

Asians are getting a strong dose of market-driven research priorities from the influx of American firms. In the past five years more than 100 companies, including General Motors, Boeing and Mobil, have set up R&D centers in India. General Electric has put its largest non-U.S. lab in Bangalore, where the company employs 1,600 mostly Indian researchers. Johnson & Johnson, DuPont, Procter & Gamble and other firms are also considering setting up their own labs. "The world has realized that if you don't have an India address [in R&D], you are in trouble," says R. A. Mashelkar, head of the Council of Scientific and Industrial Research.

India has had some luck in turning this influx into homegrown success, particularly in pharmaceuticals and information technology. Start-up firms are beginning to appear in Hyderabad and Bangalore because of their talent pool and the many scientific institutions located there. Kiran Mazumdar-Shaw, a zoologist, became the richest woman in India in April when she floated her biotech company, Biocon, which makes a cholesterol-lowering drug. But stories like hers are few and far between. "India needs to break away from imitative to more inventive R&D," says Mazumdar-Shaw (interview).

In China, scientists have begun to publish their research in the best Western journals, and each week brings news of some new research project or investment. Last week Cisco Systems said it would spend $32 million on an R&D center in Shanghai to develop new voice technologies. China has targeted biotechnology (for both agriculture and medicine), energy and nanotechnology as areas of opportunity. Scientists, though, are laboring under a political system that is antithetical to a healthy research culture. Chinese officials still tend to favor state-run enterprises, which get first dibs on new technology, capital and access to markets. "The problems of science and technology in China are not so much scientific as they are problems of management, economics and politics," concluded a report by the U.S. Embassy in Beijing.

The challenge for both India and China in the next few years is to bolster research at universities and bring industry into the mix. "There's great skills in both places," says Paul Horn, head of research at IBM, which has labs in both countries. "At the Ph.D. level, it's comparable to the expertise you see in the U.S. But not in the collaborative university level." Asian universities, though, are reaching out to their Western counterparts. Beijing University, for instance, is collaborating with Yale on plant genetics. "Chinese universities have only in recent years made a commitment in terms of funding scientific research," says Yale chemist Andy Hamilton, "so the potential for collaboration is very recent." It may only be a matter of time before Asian researchers acquire the DNA for innovation.