Role of Transnational Corporations in the Evolution of a high-tech Industry: The Case of India’s Software Industry
India’s software industry presents the case of an internationally competitive high-tech industry from a developing economy. This paper takes the evolution of the industry in terms of human capital accumulation. The initial stock of human capital in India led to entry of TNCs, which triggers a cumulative process of further human capital accumulation through the market structure dynamics and spillovers. This paper develops a simple theory and tests the propositions empirically. The empirical analysis is based on both qualitative information collected through field interviews and econometric analysis of firm level panel data. There is significant evidence to the positive contribution of TNCs for the competitive evolution of the industry.
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