Contrary to the assertions of left-wing econoticians, throwing taxpayer money at targeted investments like stem cell harvesting and windmill polishing is not the way to grow an economy. According to one blogger who’s close to the source, the reason for India’s high-tech boom is free enterprise and trade, not socialism and government planning!
It all started small. In 1989, when I graduated from IIT Madras, I do remember hearing about this small software company called Infosys that came for campus interviews. But the IITs didn’t graduate anywhere near the engineers [IIT Madras graduated 250 a year, including all branches of engineering] to satisfy the demand from these companies. So companies like Infosys went to the emerging private engineering colleges. I remember that in late 80’s, the dominant public sector companies of the era [now mostly dead or dying!] would not hire private engineering college graduates. So privatization in higher education in one state of India accidentally provided the fuel for the emerging private sector companies.
There was absolutely no coordination between the policies at the state level where MGR was backed into a political corner, so private sector education was an innovation he came up with on the spur of the moment, and those at the central level, where Rajiv Gandhi, fascinated by technology, liberalized computer imports. For those of you mercantalists, that trade liberalization, which first led to imports, eventually led to the emergence of the export industry.
To summarize, after 40 years of socialist rule, India in the 1980’s was in a state of stagnation and decline. It was only when three Indian states broke the government monopoly on engineering education and the government opened up the market to technology imports that the IT boom started.
So really government policy played only a “getting the hell out of the way” role. There really was no pro-active government role in the emergence of IT.
Worth thinking about since the current Federal Regime favors central planning in all sectors of the economy.