Growth of the IT Industry: India and the World

Jati Sengupta
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Jati Sengupta: University of California

Chapter 4 in India’s Economic Growth, 2005, pp 97-129 from Palgrave Macmillan

Abstract: Abstract The information technology (IT) sector in an economy has many dimensions, each of which influences the growth process significantly. First, it brings in a new era of industrial revolution through its impact both locally and globally. This impact is generated through innovations in software technology and data processing capabilities. Managerial skills and work performance in plants get a tremendous boost. Second, the key component of the IT system is knowledge capital and organizational knowhow, which are always complementary to other inputs. This complementarity generates spillover effects in other industries using IT services. Third, the IT input is not subject to diminishing returns, so that its growth contributions need not decline over time, i.e., it has a steady state growth effect rather than a level effect. Finally, the investment in IT input through R&D and related expenditures helps improve the efficiency of the IT sector itself and this efficiency spreads to other manufacturing, processing, distribution and service sectors through learning by doing, externalities and forward linkages to other sectors.

Keywords: Information Technology; Foreign Direct Investment; Data Envelopment Analysis; Venture Capital; Technical Change (search for similar items in EconPapers)
Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-50532-2_4

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DOI: 10.1057/9780230505322_4

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