| Chapter 1: | Introduction |
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country largely isolated from the world until the early 1990s has suddenly risen to become one of the world's leaders in software development (Saxenian, 2004). The rise of India in this industry is puzzling as it challenges two central ideas in the contemporary economic-development literature. First, it shows that industrially backward economies can become global players in a high-technology industry within a short span of less than 2 decades, something that the existing literature did not consider feasible. Second, it focuses sharply on the role of the state in allowing developing economies in high-technology industries to skip ahead within an overall neoliberal policy regime, an aspect that does not find much support in the contemporary economic-development literature.
Regional Development of the Software Industry
After Reforms: The Puzzle
India's success story becomes more interesting and complicated when we consider the regional variations in the growth of this industry within the country. The growth of this industry has been highly uneven across the different geographical regions within the country. Particularly the southern region of the country has become the leading region in this industry (Ramachandran & Ray, 2005). Within this region, Karnataka, with its Bangalore cluster, has been the leading state in this industry in the entire country. However, three other southern states have achieved remarkable success in promoting this industry since the 1990s, though in different and contrasting ways. These states are Tamil Nadu, with its Chennai cluster; Andhra Pradesh, with its Hyderabad cluster; and Kerala, with its Trivandrum and Kochi clusters. Though Kerala did not perform well during the 1990s, it has achieved considerable success during the current decade. It is