| Chapter 1: | Introduction |
cost advantages, and cross-national linkages with the Indian-origin diaspora in the United States. These explanations are certainly helpful, but they mostly take the whole country as a unit and are unable to explain why only certain regions within the country have succeeded in establishing this industry and not others. This is especially relevant considering the fact that central government policies have been the same for the entire country. There has been very little investigation of how the macro- and microlevel policies adopted by different states within the country have affected the differential development of the industry across these states. They also do not explain how the different policies at the subnational level have affected the type and structure of the industry that evolved within those regions. In this book, I seek to fill a portion of this gap in the literature.
The focus here is on the role of the regional (subnational) governments in promoting this industry within their regions. The approach that I adopt is to present and examine arguments about the role of the regional governments in the development of this industry. I examine the systematic linkages between state policies and the growth of this industry in these states within a comparative framework. The central argument that I examine here is that in India's liberalizing economy, these regional governments influenced the industry-wide factor conditions by providing specialized infrastructure and increasing the availability of skilled labor, implementing proemployer policy reforms, and facilitating the production and marketing linkages between local and foreign firms and markets. This allowed local firms to exploit the opportunities offered by increasing vertical specialization of firms across a wide range of industries in the developed economies. While the influence of the dominant-class coalitions consisting of industrialists and professionals in the political economy of decision making in Tamil Nadu