| Chapter 1: | Introduction |
important to note here that all these latecomer states achieved success after the central government initiated wide-ranging economic reforms in the country in 1991. These reforms resulted in the abolition of central government controls on investment and industrial location decisions and in market-oriented reforms in trade and foreign exchange policies (Bajpai & Sachs, 1999; Chakravorty, 2000; Srinivasan, 2005).
The story of India's success in software development thus presents us with multiple puzzles that can help us advance the current state of the literature. First, it can help us understand how the state (the central and the regional governments) can play a role in industrial advancement in knowledge-intensive and innovation-based industries, especially within a neoliberal policy framework when the state becomes much less interventionist in directing and controlling industrial investment. Second, examining the contrasting ways in which these three different states in India have established their software industries can provide us with an understanding of the multiple pathways that are available to developing regions for industrial development and how they affect the type and structure of the industry that evolves. Finally, examining the relationships between the local software industry and global information technology (IT)–production networks presents us with an opportunity to understand how vertical fragmentation and firm specialization offer new opportunities for industrial development of backward economies.
In this book, I examine the aforementioned issues with respect to the development of the software industry in Tamil Nadu, Andhra Pradesh, and Kerala. Figure 1.1 shows the location of these states.
My specific focus here is to examine the role of the regional governments in these three latecomer states in establishing a