India as a Global Supplier of Products and Services: Expectations and Emerging Challenges

ABSTRACT

Recently, Goldman Sachs released a report titled “Dreaming with BRICs: The Path to 2050” in which the authors proposed that India will become the third largest economy by 2035 (Wilson and Purushothanam 2003). Based on extant literature on economic development, country advantages, and resource-based theory of firms, we suggest that a country typically has two types of resources–institutions (including infrastructure) and human capital, and the criticality of these resources varies based on the industry under consideration. For example, transportation and logistics institutions may be very critical for the automobile industry but less relevant for the BPO (business process outsourcing) industry that relies on telecommunications infrastructure. Based on our examination of extant research and our extensive conversations with senior executives and policy makers in India, we delineate existing expectations and our prescriptions for India to emerge as a global supplier of products and services. We identify industries that need to be encouraged, industries in which selective investments are required, and industries that do not need to be encouraged. The paper suggests directions for firms and policy makers, and highlights directions for future development.

KEYWORDS:

• Indian Economy
• economic development
• resource-based theory of firms
• global competitiveness strategy