Building Domestic Capabilities in a Global Setting
Edited by Bengt-Åke Lundvall, K. J. Joseph, Cristina Chaminade and Jan Vang
Chapter 7: Sectoral Innovation Systems in Developing Countries: The Case of ICT in India
K.J. Joseph 7.1 Introduction The last two decades have witnessed a major shift in the development strategy among developing countries. The change implied a move away from import substitution with a more activist role for the state in almost all sectors of the economy to an outward-oriented strategy with market forces playing a prime role. The initial impetus to such a shift presumably has been provided by the miraculous growth performance of South-East Asian countries that was attributed to outward-oriented policies and the reduced role of government intervention. The process was accelerated with the formation of WTO wherein the developing countries, under various multilateral agreements, apart from liberalizing their trade and investment regime, had to make various commitments with respect to public investment, fiscal reform, intellectual property rights among others. The outcome has not been very encouraging for many developing countries. While some of the Asian countries like China and India have managed to improve their growth performance, most of the countries in Latin America and sub-Saharan Africa have had to contend with ‘lost decades’ (Wade, 2004; Sanchez, 2003; Rodrik, 2005; World Bank, 2005 among others). The disenchantment with the development experience during the last two decades resulting from the unequal integration into the world economy has brought the issue of catch-up – the process by which the gap in development with respect to leading countries is reduced (Fagerberg and Godinho, 2004) – to the fore. The development experience of most countries indicates that the catching-up process is associated with the emergence...
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