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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.
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Chapter 7: Development through Knowledge: Capability Replication in Global Innovation Communities

Gita Surie


Gita Surie* Micro studies on development and technology transfer to emerging economies suggest that cross-national differences in productivity and performance may be influenced by national systems, institutions, and policies that affect the innovative capabilities and aspirations of firms (Nelson, 1993; Dahlman et al., 1987; Enos and Park, 1988). However, while economists remain interested in cross-national differences at the industry level, the role of the firm in building capabilities is underemphasized. Hence, the processes that shape the development of national capabilities and facilitate innovation are not well understood. This chapter aims to address this lack by developing a framework for capability creation and diffusion in emerging economies such as India, which links firms with industries, the institutional environment, and with global markets. In the absence of well-developed indigenous markets and the latest developments in manufacturing technologies, firms in emerging economies seek external markets and alternative sources of new technology. This fact is well documented in research on the development of the newly industrialized countries (NICs) and also evidenced by the diffusion of manufacturing technology from the UK to the USA in the early days of industrialization (Licht, 1995). We focus on how cross-border interactions with multinational firms catalyze local learning, adaptation, and innovation; and by inducing competition in the domestic environment, increase specialization, and align domestic firms with the global economy in an evolving international division of labor. Evidence from case studies in the software industry suggests that capability building and learning through knowledge creation is a feasible development strategy...

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