State policy, liberalisation and the development of the Indian software industry

Heeks, Richard Brendan (1991). State policy, liberalisation and the development of the Indian software industry. PhD thesis The Open University.



This thesis investigates the relationship between industrial development and industrial policy in a developing country. The chosen industry - software - is of recent origin and of growing importance in many developing countries, for which it can present one of the best entry points into the information technology production complex. Yet this industry and, particularly, the role of state policy in its development have been relatively neglected within the literature.

The key policy issue of recent years has been policy liberalisation, and the thesis takes as its central theme the role that policy liberalisation plays in software industry development. A specific case study is made of the Indian software industry and Indian software policy because these have been long-standing, and because they combine high growth with liberalisation.

The conclusion reached is that certain policy liberalisations may have a role to play in software industry development but that liberalisation cannot be seen as a 'panacea' for such development. The impacts of some liberalisations run counter to some long-term development objectives while state intervention is seen to have played a positive and necessary role in assisting software industry growth. At the same time, certain liberalisations are found to be either politically or financially unfeasible. Software policy makers face a major decision on whether to orient their industry towards the domestic or export markets. It is argued that the Indian industry has shown an export bias which should be reduced by greater orientation to the domestic market. Other developing countries may need to focus even more on domestic-oriented production rather than exports.

Policy is not the only determinant of software industry development because technology, market entry barriers, input supply constraints, and producer-consumer relations also play a part. Nevertheless, policy has a very important role to play and should be applied in a non-dogmatic way that is responsive to the specific and changing circumstances of individual nations and industries.

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