Analysis of the Role of Industrial Policy in Promoting the Information Technology and Banking Sectors in India since 1950, and the Role of these Sectors in Promoting Inclusive Growth

Date Presented:

February 8

Abstract:

This thesis uses the tertiary sector in India to inform policy debate for economic development in developing countries—in particular, the information technology (IT) services and banking sector as a case study of economic governance. This paper uses a new dataset on the IT sector collected from paper archives of the Software Technology Parks of India (STPI) in New Delhi during July 2013 and a dataset on the seventy-two largest banks in India collected from public documents at the Reserve Bank of India in Mumbai. Socioeconomic indicators—specifically wages, higher education, and urban agglomeration—only partially account for the growth of these sectors. In both the banking and IT sectors, government ownership promoted stability and geographical agglomeration but reduced performance. Government investment in a shared infrastructure commons through STPI was critical for the growth of the IT sector after 1991. Gradual deregulation following state ownership resulted in significant gains for both sectors. The paper concludes with a theory for the growth of technologically advanced sectors in India, which promotes gradual liberalization in sequence with government promotion of infrastructure and domestic competition.

See also: 2014
Last updated on 02/04/2014