India has emerged as a fastest growing economy. Is it due to IT firms or the IT industry?
Article Process and intensity of internationalization of IT firms – ...
I have no figures on just the IT firms. But the IT firms are embedded within the broader economic environment that makes the sources of growth a concerted effort of policy makers. The literature seems to highlight the following points about the sources of growth.
1. Dismantling of domestic regulation in the 1980s.
2. Movement from import-substitution to export competitiveness policies, which finance imports through exports gains.
3. Maintaining expenditure on human capital—health, education, and rural developments.
4. Policies targeting economic growth and the reduction of poverty, emphasizing employment over capital formation that dominated the older planning models.
5. Financial liberation that has allowed corporations to raise capital from abroad. According to A. Singh 1995 technical paper no. 2 of the World Bank, the average Indian corporation raised approximately 60 or their long-term capital externally. I attach the figures below.
There are many sectors contributed to the economic growth of Indian Economy. IT is of course, one of the main sectors with annual revenue of over USD 200b (NASSCOM, 2012). Other sectors like manufacturing, agriculture, telecomm, healthcare, iron and steel, and infrastructure sectors are also equal contributors to the economic growth of the country.
It depends on what we understand under 'ecomomic growth' and what indicators we take into consideration. Economists are more likely to operate with the second order derivatives - i.e. pace of changes of a particular phenomena rather than focusing on absolute numbers. Above these we need also to contextualise our analysis, say - compare with a number of somewhat 'similar' cases. Taking all these into account, if you compare the pace of GDPpc growth in India and China you will see that in India the rate of GDPpc growth has been slightly increased between 1980/1990 and 2000/2011, while in China it has been remarkably increased - from 1.2 times in 1980/1990 to around 2.6 in 2000/2011. In absolute terms, in 1980 Inidia's GDPpc was almost 1.7 bigger than China's, but by 2011 GDPpc in China exceeded the one in India 2.3 times. The share of urban population in China increased more than twice - from 20.6% in 1982 to 52.6%, in 2012, while in India - only from 23.1% to 31.6%. By this, we'd better studying the factors that bring the development and economic growth in India down. And there is a number of papers that target this issue. One of the convensional reason is that India failed land reforms - and, unfortunately, this failure is hardly compensated by the governmental human capital investments.
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