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Information Communication Technology and Economic Development

Information Communication Technology and Economic Development

Learning from the Indian Experience

Edited by Tojo Thatchenkery and Roger R. Stough

Information Communication Technology and Economic Development reveals new insights regarding the complex process of globalization. It shows how the generation and circulation of intellectual capital in the US and India in ICT have led to greater productivity in the US while facilitating the economic development of India. Most industrialized nations now see the vast intellectual capital-based services that India provides at extremely competitive rates as key to their own national competitiveness in the global arena. The contributors’ findings suggest that India’s ICT-led growth will accelerate in the next ten years, launching India as a major global economic power next to the US and China.

Chapter 4: Recent Developments in India’s Service Economy and the Role of the Information Technology Industry

Cherian Samuel

Subjects: development studies, development economics, economics and finance, development economics, innovation and technology, technology and ict


Cherian Samuel* Structural change in an economy is usually measured in terms of changes in the sectoral – primary (agriculture), secondary (industry), and tertiary (services) shares of output/value added/employment. From a purely mathematical viewpoint, the economic structure at any given time is dependent on initial conditions of sectoral shares and the growth rates between the initial and final time periods. From this perspective, a study of structural change in an economy should ultimately focus on explaining the initial conditions and the subsequent sectoral growth rates. This chapter attempts to study recent structural changes in the Indian economy, with particular emphasis on the services sector. In turn, it also tries to identify the role of the information, communications and technology (ICT) industry in the recent growth of the Indian service economy. This chapter is divided into four parts: part one surveys the literature on structural changes in economies; part two presents the data analysis on structural change; part three looks at different aspects of the Indian information technology (IT) industry; and part IV concludes the study. I THE SERVICE ECONOMY For estimating the gross domestic product (GDP), the whole economy is usually partitioned into primary, secondary and tertiary sectors. These sectors are used interchangeably with agriculture, industry and services. The GDP estimates of the primary sector, that is agriculture, forestry and logging, fishing and a part of the secondary sector, that is mining and quarrying, registered manufacturing and construction are based on the production approach. In the remaining part of the secondary...

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