Is India really Knowledge Economy?

Continuation topic of argument about "incentive to go for higher education"...

Lets see the importance of Research... Research to create new products, industries...

India, recently boasting about being "Knowledge Economy".
What type of economies are there?
* Product economy - manufacture products, and sell.
* Service economy - serve others - like 90% of Indian software industry does - develop software for other companies products...
* Knowledge economy - Create product plans, designs... outsource building them to others (like software to India, factory to China) ??

If above is true, then:
- China, Japan, Korea are Product economy (manufacturing products)
- China, Korea are Service economy (Manufacturing as service)
- India is Service economy only (developing software for others)
- US, Japan, and Korea are Knowledge economy - they develop product plans, architect them - and outsource realization to others, do some within their country.
- US is Product economy (high value products only!)

And, regarding India - without having technology creation by research, we will be doing only technology-service... this is called service economy... this is not knowledge economy...
A country boasting "knowledge economy" - meaning sell your knowledge as service for others to create products, and you buy those products at a higher price/value than your service? I don't think this is good in long term!

To create products/value, lot of research, not service, is needed...
Atleast China announced plans and taking steps towards moving from "Made in China" to "Made By China"...

What is the Incentive to go for Higher Education?

What is the incentive for continuing to higher studies (M.Tech, Ph.D.) after B.Tech.?

I heard, in South Korea, personal income tax is less for Masters... and significantly less for candidates with Ph.D. No wonder, Samsung (South Korean Electronics Giant), over 10 years -- increased Doctors (Ph.D.) by 5.5X (@ 300/year!), while regular employees increased by only 2X.
Below is the data from news item (How to grow an electronics giant - from http://www.eetasia.com/ - posted 17/Nov/2008)

M.Tech. takes 2-years, Ph.D. takes ~4-years...
After M.Tech. or Ph.D., candidates get lesser designation (less by ~1-2 years) compared to their classmates, in a given industry (Except for Research positions... very less in openings India... very high in demand... very difficult to fill... a paradox...)
Going for M.Tech. - understood - it is only 2-years... not a big issue (earning a livelihood for family (=parents)) for many....
Going for Ph.D. - the trouble factor - it is 4-years... a big issue for many... time to settle down and get married... without earning - it is very difficult in India... (may be exception for rich families... or for candidates very enthusiastic in higher education).

So, where is the incentive for Indian students for higher education?

Without having technology creation by research, we will be doing only technology-service... this is called service economy... this is not knowledge economy...
A country boasting "knowledge economy" - meaning sell your knowledge as service, for others to create products, and sell products to you?