IDEAS home Printed from https://ideas.repec.org/p/eab/develo/22926.html
   My bibliography  Save this paper

IT and ITES as an Engine of Growth : An Exploration into the Indian Experience

Author

Listed:
  • Seema Joshi

    (IEG)

Abstract

India emerged as one of the fastest growing economies of the world during the 1990s because of the spectacular dynamism shown by the services sector. Indias services sector has been burgeoning fast and one of the major drivers of the growth of services sector is information technology (IT) and information technology enabled services (ITES). It is well documented in literature that IT impacts growth by different channels. In this study we try to empirically verify the question : Can IT and ITES be an engine of growth? Using micro-level data of 100 households of 20 IT and ITES firms along with secondary data we tried to estimate the extent of indirect employment generation at macro level and the share of IT and ITES in total employment and total value added. According to our study, one job for skilled professional employed in IT and ITES spins off jobs for 0.48 semi-skilled, low skills or unskilled workers. As per our estimates, the 16 lakh workers who are expected to be directly employed in IT sector in the FY 2008 would generate secondary employment for 7,68,000 people which would constitute 0.16 % of total employment. However, the share of consumption expenditure of 16 lakh professionals would be 20% of total value added. Assuming the consumption expenditure of the IT and ITES workers and total value added to be the same/constant when we tried to assess the contribution of consumption expenditure of 2.3 million workers (who are projected to be directly absorbed by IT sector by 2010, NASSCOM, 2005) to total value added it comes out to be 29% of total value added. The study says that the proportion of IT-ITES in total employment may be small but its contribution to total value added is still very high. Indeed IT and ITES can be an engine of growth in Indias economy by way of generating demand impulses in the economy as has been hypothesized and shown through the present study. Keeping in view the contributions of this sector and its huge untapped potential as evident from the present study and various other studies, there is a need for introduction and implementation of policy initiatives to address the challenges faced by this sector and to sustain the growth driven by the services sector.

Suggested Citation

  • Seema Joshi, 2009. "IT and ITES as an Engine of Growth : An Exploration into the Indian Experience," Development Economics Working Papers 22926, East Asian Bureau of Economic Research.
    • Handle: RePEc:eab:develo:22926
    as

    Download full text from publisher

    File URL: http://www.eaber.org/node/22926
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ajit Singh & Sukti Dasgupta, 2005. "Will services be the new engine of economic growth in India?," Working Papers wp310, Centre for Business Research, University of Cambridge.
    2. Robert J. Gordon, 2000. "Does the "New Economy" Measure Up to the Great Inventions of the Past?," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 49-74, Fall.
    3. Lars-Hendrik Roller & Leonard Waverman, 2001. "Telecommunications Infrastructure and Economic Development: A Simultaneous Approach," American Economic Review, American Economic Association, vol. 91(4), pages 909-923, September.
    4. Arora, Ashish & Athreye, Suma, 2002. "The software industry and India's economic development," Information Economics and Policy, Elsevier, vol. 14(2), pages 253-273, June.
    5. Martin L. Weitzman, 1998. "Recombinant Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(2), pages 331-360.
    6. Pohjola, Matti (ed.), 2001. "Information Technology, Productivity, and Economic Growth: International Evidence and Implications for Economic Development," OUP Catalogue, Oxford University Press, number 9780199243983.
    7. Erik Brynjolfsson & Lorin M. Hitt, 2000. "Beyond Computation: Information Technology, Organizational Transformation and Business Performance," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 23-48, Fall.
    8. Nirvikar Singh, 2003. "India's Information Technology Sector: What Contribution to Broader Economic Development?," OECD Development Centre Working Papers 207, OECD Publishing.
    9. Bedi, Arjun S., "undated". "The Role of Information and Communication Technologies in Economic Development: A Partial Survey," Discussion Papers 279848, University of Bonn, Center for Development Research (ZEF).
    10. Neil M. Swan, 1985. "The Service Sector: Engine of Growth?," Canadian Public Policy, University of Toronto Press, vol. 11(s1), pages 344-350, July.
    11. Poh-Kam Wong, 1998. "Leveraging the Global Information Revolution for Economic Development: Singapore's Evolving Information Industry Strategy," Information Systems Research, INFORMS, vol. 9(4), pages 323-341, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dzhumashev, Ratbek & Mishra, Vinod & Smyth, Russell, 2016. "Exporting, R&D investment and firm survival in the Indian IT sector," Journal of Asian Economics, Elsevier, vol. 42(C), pages 1-19.
    2. Li, Hao & Han, Jian & Xu, Yayun, 2023. "The effect of the digital economy on services exports competitiveness and ternary margins," Telecommunications Policy, Elsevier, vol. 47(7).
    3. Ratbek Dzhumashev & Vinod Mishra & Russell Smyth, 2011. "Exporting, R&D Investment and Firm Survival," Monash Economics Working Papers 39-11, Monash University, Department of Economics.
    4. Arup Mitra & Aviral Pandey, 2013. "Unorganized Sector In India: Employment Elasticity And Wage-Productivity Nexus," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 18(04), pages 1-19.
    5. Chatterjee, Sidharta, 2021. "On the Theory of Knowledge Resource Inequality: Role of Knowledge Capital in Social Transformation," MPRA Paper 105221, University Library of Munich, Germany.
    6. Balwant Singh Mehta, 2020. "Inter-industry Linkages of ICT Sector in India," Indian Journal of Human Development, , vol. 14(1), pages 42-61, April.
    7. Tripathi, Amarnath, . "Agriculture is Still the Engine of Economic Growth: Empirical Evidence from Uttar Pradesh, India," Asian Journal of Agriculture and Development, Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), vol. 13(01).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. K.J Joseph & Vinoj Abraham, 2007. "Information technology and productivity: Evidence from India's manufacturing sector," Centre for Development Studies, Trivendrum Working Papers 389, Centre for Development Studies, Trivendrum, India.
    2. Edquist, Harald & Henrekson, Magnus, 2017. "Swedish lessons: How important are ICT and R&D to economic growth?," Structural Change and Economic Dynamics, Elsevier, vol. 42(C), pages 1-12.
    3. M'HENNI, Hatem, 2004. "La fracture numérique Nord-Sud de la méditerranée; une explication néo-institutionnelle [A digital divide between north and south of Mediterranean sea: A neo-institutional explanation]," MPRA Paper 27548, University Library of Munich, Germany.
    4. Francesco Daveri, 2002. "The New Economy in Europe, 1992--2001," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 18(3), pages 345-362.
    5. Singh, Nirvikar, 2006. "Services-led industrialization in India: Assessment and lessons," MPRA Paper 1276, University Library of Munich, Germany.
    6. repec:cdl:ucscec:qt8jn2b8z6 is not listed on IDEAS
    7. Karl Whelan, 2002. "Computers, Obsolescence, And Productivity," The Review of Economics and Statistics, MIT Press, vol. 84(3), pages 445-461, August.
    8. Jonathan Temple, 2002. "The Assessment: The New Economy," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 18(3), pages 241-264.
    9. Kiley, Michael T., 2001. "Computers and growth with frictions: aggregate and disaggregate evidence," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 55(1), pages 171-215, December.
    10. Davide Consoli & Pier Paolo Patrucco, 2011. "Complexity and the Coordination of Technological Knowledge: The Case of Innovation Platforms," Chapters, in: Handbook on the Economic Complexity of Technological Change, chapter 8 Edward Elgar Publishing.
    11. António Madureira & Nico Baken & Harry Bouwman, 2011. "Value of digital information networks: a holonic framework," Netnomics, Springer, vol. 12(1), pages 1-30, April.
    12. J. Bradford DeLong, 2002. "Do We Have a "New" Macroeconomy?," NBER Chapters, in: Innovation Policy and the Economy, Volume 2, pages 163-184, National Bureau of Economic Research, Inc.
    13. Harald Edquist & Magnus Henrekson, 2006. "Technological Breakthroughs and Productivity Growth," Research in Economic History, in: Research in Economic History, pages 1-53, Emerald Group Publishing Limited.
    14. Yoann Barbesol & Thomas Heckel & Simon Quantin, 2008. "Élasticité de la production au capital informatique : estimations à l’aide de données d’entreprises," Économie et Statistique, Programme National Persée, vol. 419(1), pages 55-71.
    15. Andrew Atkeson & Patrick J. Kehoe, 2002. "The transition to a new economy after the Second Industrial Revolution," Proceedings, Federal Reserve Bank of San Francisco, issue nov.
    16. Szalavetz, Andrea, 2011. "Innovációvezérelt növekedés? [Innovation-driven growth?]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(5), pages 460-476.
    17. Lach, Saul & Trajtenberg, Manuel & Shiff, Gil, 2008. "Together but Apart: ICT and Productivity Growth in Israel," CEPR Discussion Papers 6732, C.E.P.R. Discussion Papers.
    18. Ajoy Ketan Sarangi & Rudra Prakash Pradhan, 2020. "ICT infrastructure and economic growth: a critical assessment and some policy implications," DECISION: Official Journal of the Indian Institute of Management Calcutta, Springer;Indian Institute of Management Calcutta, vol. 47(4), pages 363-383, December.
    19. Boyer, Robert, 2001. "La "nouvelle économie" au futur antérieur : histoire, théories, géographie," CEPREMAP Working Papers (Couverture Orange) 0113, CEPREMAP.
    20. Fischer, Justina A.V., 2012. "The choice of domestic policies in a globalized economy: Extended Version," MPRA Paper 37816, University Library of Munich, Germany.
    21. Bertschek, Irene & Briglauer, Wolfgang & Hüschelrath, Kai & Kauf, Benedikt & Niebel, Thomas, 2016. "The economic impacts of telecommunications networks and broadband internet: A survey," ZEW Discussion Papers 16-056, ZEW - Leibniz Centre for European Economic Research.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • L80 - Industrial Organization - - Industry Studies: Services - - - General
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eab:develo:22926. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Shiro Armstrong (email available below). General contact details of provider: https://edirc.repec.org/data/eaberau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.