Publication: New Industries from New Places : The Emergence of the Software and Hardware Industries in China and India
Loading...
Date
2009
ISSN
Published
2009
Author(s)
Editor(s)
Abstract
China and India have grown rapidly in importance in the global economy over the past two decades the same period in which hardware and software have become important tradable products in the global economy. China has reached global scale in the hardware industry but not in software; India has achieved the reverse. These recent developments offer new insights into the ways in which new industries can take root and flourish within the broader context of developing economies. This progress has attracted widespread comment, most of it anecdotal or based on partial explanations of industrial growth. This study seeks to provide a fuller explanation based on an empirical analysis of the macro and micro underpinnings of these contrasting growth stories. In doing so, the study sheds a broader light on the economic development paths that China and India have taken since 1990, and also on the process by which developing economies can enter and succeed in new markets.
Link to Data Set
Citation
“Nollen, Stanley; Gregory, Neil; Tenev, Stoyan. 2009. New Industries from New Places : The Emergence of the Software and Hardware Industries in China and India. © World Bank. http://hdl.handle.net/10986/13805 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Strengthening China's Technological Capability(World Bank, Washington, DC, 2007-08)China is increasing its outlay on research and development and seeking to build an innovation system that will deliver quick results not just in absorbing technology but also in pushing the technological envelope. China's spending on R&D rose from 1.1 percent of GDP in 2000 to 1.3 percent of GDP in 2005. On a purchasing power parity basis, China's research outlay was among the world's highest, far greater than that of Brazil, India, or Mexico. Chinese firms are active in the fields of biotechnology, pharmaceuticals, alternative energy sources, and nanotechnology. This surge in spending has been parallel by a sharp increase in patent applications in China, with the bulk of the patents registered in the areas of electronics, information technology, and telecoms. However, of the almost 50,000 patents granted in China, nearly two-thirds were to nonresidents. This paper considers two questions that are especially important for China. First, how might China go about accelerating technology development? Second, what measures could most cost-effectively deliver the desired outcomes? It concludes that although the level of financing for R&D is certainly important, technological advance is closely keyed to absorptive capacity which is a function of the volume and quality of talent and the depth as well as the heterogeneity of research experience. It is also a function of how companies maximize the commercial benefits of research and development, and the coordination of research with production and marketing.Publication Leveraging ICT for Growth and Competition in Bangladesh(World Bank, Washington, DC, 2009)The objective of this study is to assist Bangladesh in becoming a viable player in the IT/ITES industry in five years by identifying the strategies, programs and investments needed in order for the country to leverage ICT for economic growth and competitiveness, as well as for social development by increasing gender equality and youth employment. Why is it important for Bangladesh to concentrate its efforts in developing the IT/ITES industry? First of all, industry development is aligned with many of the goals for Digital Bangladesh as described in the manifesto, including development of software exports, IT parks, youth employment, etc. Secondly, the global IT/ITES is too large to be ignored - leaving a significant untapped market for which many countries are competing. Beyond direct economic benefits, IT/ITES growth can generate large-scale employment. India and the Philippines are established competitors while China, Vietnam, Sri Lanka and Pakistan are emerging as new threats. To-date, the IT/ITES industry development activities in Bangladesh, while not without its successes, generally lacks widely accepted, centralized leadership or focus. This must change if Bangladesh is going to mount serious competition for an increase in market share.Publication Leveraging High Technology to Drive Innovation and Competitiveness and Build the Sri Lankan Knowledge Economy(World Bank, 2009-06-01)This study was done at an opportune time in Sri Lanka's history: with end of the war there is hope for the country's peace, prosperity, and growth. To encourage economic growth, this study examines how high technology can drive competitiveness in key export-oriented industries and help build a strong Sri Lankan knowledge economy. The study examines global experience from economies around the world, but particularly several in Southeast Asia, to provide guidance on the role of national governments in enabling the development of a high-tech export sector and the application of high technologies in domestic production. More specifically, it reviews public policies, strategies, and investments in comparable countries that have been successful in promoting the absorption and use of high technologies for competitiveness, and applies lessons to Sri Lanka.Publication Global Value Chains in the Electronics Industry : Was the Crisis a Window of Opportunity for Developing Countries?(2010-09-01)This paper presents evidence of the importance of electronics global value chains (GVCs) in the global economy, and discusses the effects of the recent economic crisis on the industry. The analysis focuses on how information is exchanged and introduces the concept of "value chain modularity." The authors identify three key firm level actors -- lead firms, contract manufacturers, and platform leaders -- and discuss their development, or "co-evolution" in the context of global integration. Company, cluster, and country case studies are then presented to illustrate how supplier capabilities in various places have developed in the context of electronics global value chains. The findings identify some of the persistent limits to upgrading experienced by even the most successful firms in the developing world. Four models used by developing country firms to overcome these limitations are presented: (1) global expansion though acquisition of declining brands (emerging multinationals); (2) separation of branded product divisions from contract manufacturing (original design manufacturing (ODM) spinoffs); (3) successful mixing of contract manufacturing and branded products (platform brands) for contractors with customers not in the electronic hardware business; and (4) the founding of factory-less product firms that rely on global value chains for a range of inputs, including production (emerging factory-less start-ups).Publication Transforming East African ICT Sector by Creating a Business Engine for SMEs(World Bank, Washington, DC, 2011)For the purposes of this project, the East African countries included in the study were Kenya, Rwanda, Tanzania, and Uganda. The focus for this project was Small and Medium-sized Enterprises (SMEs) as for-profit or nonprofit organizations with less than 50 employees and not exceeding USD 1,000,000 in annual revenues/turnover. The main output of this project was a proposed program of interventions to drive transformational change. To succeed in this ambitious endeavor, the project articulated clear objectives and designed a blueprint for implementation including levels of resourcing, budget and monitoring metrics. Over the course of the project the team conducted brief surveys with over 90 entrepreneurs, over 50 percent of who had 3-10 years of experience in the Information and Communication Technology (ICT) sector and primarily worked at companies with 5 employees or less.
Users also downloaded
Showing related downloaded files
Publication Growth through Innovation : An Industrial Strategy for Shanghai(World Bank, Washington, DC, 2009-04-22)In broad terms, the sources of economic growth are well understood but relatively few countries have succeeded in effectively harnessing this knowledge for policy purposes so as to sustain high rates of growth over an extended period of time (commission on growth and development 2008; Yusuf 2009a). This study argues, however, that a high growth strategy which puts technology upgrading and innovation at the center might warrant a different approach from the one currently favored. It derives from the experience of global cities such as New York and London and the empirical research on industrial performance and on innovation. This has yielded four significant findings: first, monosectoral services based economies grow slowly because they benefit less from increases in productivity and from innovation. Second, manufacturing industries producing complex capital goods, electronic equipment, and sophisticated components are more Research and Development (R&D) intensive, generate many more innovations, are more export oriented, have a solid track record of rising productivity, and having achieved competitiveness, are in a better position to sustain it because the entry barriers to these industries tend to be higher. By giving rise to dense backward and forward linkages these industries can serve as the nuclei of urban clusters and maximize employment generation. Third, industrial cities create many more jobs for a middle class and tend to have a more equal distribution of income than cities which are dominated by services. Fourth, and finally, cities with a world class tertiary education and research infrastructure linked to industry, are more resilient in the face of shocks, more innovative, and better able to reinvent themselves.Publication Global Value Chains in a Postcrisis World : A Development Perspective(World Bank, 2010)The world is in the midst of a sporadic and painful recovery from the most severe economic crisis since the 1930s Great Depression. The unprecedented scale of the crisis and the speed of its transmission have revealed the interdependence of the global economy and the increasing reliance by businesses on global value chains (GVCs). These chains represent the process of ever-finer specialization and geographic fragmentation of production, with the more labor-intensive portions transferred to developing countries. As the recovery unfolds, it is time to take stock of the aftereffects and to draw lessons for the future. Have we experienced the first global crisis of the 21st century or a more structural crisis of globalization? Will global trade, demand, and production look the same as before, or have fundamental changes occurred? How have lead firms responded to the crisis? Have they changed their supply chain strategies? Who are the winners and losers of the crisis? Where are the engines of recovery? After reviewing the mechanisms underpinning the transmission of economic shocks in a world economy where trade and GVCs play increasing roles, the book assesses the impact of the crisis on global trade, production, and demand in a variety of sectors, including apparel, automobiles, electronics, commodities, and off-shore services. The book offers insights on the challenges and opportunities for developing countries, with a particular focus on entry and upgrading possibilities in GVCs postcrisis. Business strategies and related changes in GVCs are also examined, and the book offers concrete policy recommendations and suggests a number of interventions that would allow developing countries to better harness the benefits of the recovery.Publication Transforming the Urban Space through Transit-Oriented Development(World Bank, Washington, DC, 2017)Imagine a city that is more competitive, with higher-quality neighborhoods, lower infrastructure costs, and lower C02 emissions per unit of activity. This city has lower combined transportation and housing costs for its residents than other cities at similar levels of economic activity. Its residents can access most jobs and services easily through a combination of low-cost public transport, walking and cycling. Its core economic and population centers are resilient to natural hazards. It is able to finance improvements to public space, connectivity, and social housing by capturing value created through integrated land use and transport planning. Such a vision has never been more relevant for rapidly growing cities than it is today. Transit-oriented development (TOD) can play a major role in achieving such a vision. Based on an observation of methodologies applied in different countries, the World Bank's Community of Practice on Transit Oriented Development has developed a methodology called the 3 Value (3V) Framework, which outlines a typology to facilitate TOD implementation at the metropolitan and urban scale in various contexts. The 3V Framework equips policy and decision makers with quantified indicators to better understand the interplay between the economic vision for the city, its land use and mass transit network, and urban qualities and market vibrancy around its mass transit stations. This book provides examples of approaches taken by cities like London and New York to align their economic, land use, and transport planning to generate jobs and high value. We hope this book will help readers develop a coherent vision, policies, and strategy to leverage the value created through enhanced connectivity and accessibility and make cities even more appealing places to live, work, play and do business.Publication China 2030 : Building a Modern, Harmonious, and Creative High-Income Society [pre-publication version](Washington, DC: World Bank, 2012-02-27)China should complete its transition to a market economy--through enterprise, land, labor, and financial sector reforms--strengthen its private sector, open its markets to greater competition and innovation, and ensure equality of opportunity to help achieve its goal of a new structure for economic growth. These are some of the key findings of a joint research report by a team from the World Bank and the Development Research Center of China’s State Council, which lays out the case for a new development strategy for China to rebalance the role of government and market, private sector and society, to reach the goal of a high income country by 2030. This report recommends steps to deal with the risks facing China over the next 20 years, including the risk of a hard landing in the short term, as well as challenges posed by an ageing and shrinking workforce, rising inequality, environmental stresses, and external imbalances. The report lays out six strategic directions for China’s future: * Completing the transition to a market economy; * Accelerating the pace of open innovation; * Going “green” to transform environmental stresses into green growth as a driver for development; * Expanding opportunities and services such as health, education and access to jobs for all people; * Modernizing and strengthening its domestic fiscal system; * Seeking mutually beneficial relations with the world by connecting China’s structural reforms to the changing international economy.Publication Two Dragon Heads : Contrasting Development Paths for Beijing and Shanghai(World Bank, 2010)In broad terms, the sources of economic growth are well understood, but relatively few countries have succeeded in effectively harnessing this knowledge for policy purposes so as to sustain high rates of growth over an extended period of time. Among the ones that have done so, China stands out. Its gross domestic product (GDP) growth rate, which averaged almost 10 percent between 1978 and 2008, is unmatched. Even more remarkable is the performance of China's three leading industrial regions: the Bohai region, the Pearl River Delta, and the Yangtze River (Changjiang) delta area. These regions have averaged growth rates well above 11 percent since 1985. Shanghai is the urban axis of the Yangtze River Delta's thriving economy; Beijing is the hinge of the Bohai region. Their performance and that of a handful of other urban regions will determine China's economic fortunes and innovativeness in the coming decades. The balance of this volume is divided into five chapters. Chapter two encapsulates the sources of China's growth and the current and future role of urban regions in China. The case for the continuing substantial presence of manufacturing industry for growth and innovation in the two urban centers is made in chapter three. Chapter four briefly examines the economic transformation of four global cities and distills stylized trends that can inform future development in Beijing and Shanghai. Chapter five describes the industrial structure of the two cities, identifies promising industrial areas, and analyzes the resource base that would underpin growth fueled by innovation. Finally, chapter six suggests how strategy could be reoriented on the basis of the lessons delineated in chapter four and the economic capabilities presented in chapter five.