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The US–Ireland–India in the catch-up cycles in IT services: MNCs, indigenous capabilities and the roles of macroeconomic variables

Author

Listed:
  • Tiago Couto Porto

    (Public Administration and Governance at Getulio Vargas Foundation of São Paulo
    Center for Studies on New Developmentalism)

  • Keun Lee

    (Seoul National University
    IEP Program)

  • Sunil Mani

    (Centre for Development Studies)

Abstract

This study attempts to explain successive changes in industrial leadership in IT services by employing the catch-up cycle theory developed by Lee and Malerba (Res Policy 46(2):338–351, 2017). A catch-up cycle was observed in which leadership have changed from the US to Ireland and subsequently to India. Currently, there is now a `coexistent leadership` in which both India and Ireland share the leadership position since Ireland has recently recovered some of its market shares. The research has two main contributions: First, it has introduced macroeconomic variables into the catch-up cycle framework and exposed that the over-reliance of Ireland on MNCs made their leadership less sustainable and more sensitive to macroeconomic variations, and thus, argued that wage rate, exchange rate and FDI were important explanatory variables to understand the rise, fall and re-rise of Irish IT service exports. Second, it is shown that India has been more effective in maintaining a leadership position by developing strong indigenous companies, a sectoral system of innovation and through better technological capabilities. Therefore, it brings an important contribution in terms of public policies and catch-up strategies.

Suggested Citation

  • Tiago Couto Porto & Keun Lee & Sunil Mani, 2021. "The US–Ireland–India in the catch-up cycles in IT services: MNCs, indigenous capabilities and the roles of macroeconomic variables," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 11(1), pages 59-82, March.
    • Handle: RePEc:spr:eurasi:v:11:y:2021:i:1:d:10.1007_s40821-020-00177-3
    DOI: 10.1007/s40821-020-00177-3
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    References listed on IDEAS

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    1. Pietro Moncada-Paternò-Castello, 2022. "Top R&D investors, structural change and the R&D growth performance of young and old firms," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 12(1), pages 1-33, March.
    2. Andreas Diemer & Simona Iammarino & Andrés Rodríguez-Pose & Michael Storper, 2022. "The Regional Development Trap in Europe," Economic Geography, Taylor & Francis Journals, vol. 98(5), pages 487-509, October.

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