software firms by providing industry-specific specialized infrastructure and facilitating the availability of skilled labor. They also implemented proemployer policy reforms to assure the firms on contentious labor issues. They also attracted expatriate professionals from the state to come back and establish firms in their native state and facilitated production and marketing linkages between the local firms and foreign markets. Each state's existing technological capabilities and infrastructure at the start of the reforms in terms of a sizable base of skilled labor, a large pool of immigrant professionals abroad, and a diversified industrial and research and development (R&D) base also contributed to the success of these states in developing the software industry during the postreform period.
How did the political economy of development in these states ensure the success of these policies? This research shows that dominant-class coalitions consisting of industrialists and professionals played a leading role in ensuring the successful implementation of these policies in Tamil Nadu and Andhra Pradesh, the two highly successful states. In the case of Kerala, however, the relatively autonomous nature of the state, its lack of genuine labor and policy reforms, its distrust of large private enterprises, and its focus on redistribution rather than growth prevented it from achieving similar success during the 1990s. However, Kerala subsequently tried to emulate the other two states by adopting similar policies and, as a result, achieved considerable success in attracting software firms and increasing their exports.
This research also brings out some noteworthy findings about state provision of finance and specialized R&D that are at variance with current thinking in the literature. Scholars have noted the vital role that developmental states have played in providing venture capital, subsidized finance, and R&D to latecomer firms in developing countries. However, these states (and even the