New Industries from New Places: The Emergence of the Hardware and Software Industries in China and India (World Bank East Asia)

Contents......Page 7
Foreword......Page 13
Acknowledgments......Page 15
About the Authors......Page 17
Abbreviations......Page 19
Part I Foundations......Page 21
1 Context for the Study of the Software and Hardware Industries in China and India......Page 23
2 A Framework for Understanding Industry Performance Differences......Page 41
3 The Legacy of China’s and India’s Investment Climates......Page 51
Part II Software......Page 73
4 Software Industry Performance in China and India: An Introduction......Page 75
5 The Influence of Factors of Production on Differences in the Software Industries of China and India......Page 83
6 The Influence of Management on the Software Industries in China and India......Page 107
7 The Effects of the Business Environment and Competition on Software Industries in China and India......Page 135
8 Summary of Factors behind the Success of China’s and India’s Software Industries......Page 151
Part III Hardware......Page 159
9 Hardware Industry Performance in China and India: An Introduction......Page 161
10 The Influence of Factors of Production on the Hardware Industries in China and India......Page 169
11 The Influence of Management on the Hardware Industries in China and India......Page 189
12 The Effects of Business Environment and Competition on Chinese and Indian Hardware Industries......Page 205
13 Summary of Explanations for the Different Outcomes for China’s and India’s Hardware Industries......Page 229
Part IV Summary and Conclusions......Page 233
14 Why Software and Hardware Industries Differed in China and India......Page 235
15 Emerging Trends in the Chinese and Indian Software and Hardware Industries......Page 241
References and Other Resources......Page 249
Index......Page 261
3.1 China’s Early Approach to Science and Technology (S&T)......Page 69
5.1 The China Brain Drain Problem......Page 85
5.2 Infosys Technologies: Software Startup with Early Self-Financed Growth......Page 102
6.1 UFIDA Software Ltd.: Risk-Taking Pays Off......Page 113
6.2 Tata Consultancy Services: A Hard Alliance as a Springboard to Software Success......Page 124
6.8 Ownership of 10 Largest Chinese Packaged Software Companies, 2005......Page 126
6.4 NRI Founds Software Companies......Page 131
7.1 SUPCON: Technology and Management Support from the Chinese Government......Page 137
7.2 Wipro: From Edible Oils to Hardware to Software......Page 142
10.11 Importance of Geographic Location......Page 187
11.1 Technology Transfer through FDI: Suzhou......Page 194
11.2 Huawei Technologies: International Leadership through Advanced Technology and Chinese Government Support......Page 196
11.3 Moser Baer: An Exception to the Rules......Page 197
11.4 Siemens: A Foreign-Owned Company’s Success in China......Page 200
11.5 HCL Perot in India: From Import-Protected Hardware to Software......Page 201
12.6 Government Policies with Negative Impact......Page 211
12.2 The Development of the Semiconductor Industry in China: Governments Pitch In......Page 215
12.3 China’s Hardware Companies Go Global......Page 226
3.1 Manufacturing as Percentage of GDP in China and India, 1968?2002......Page 57
3.2 GDP Growth in India......Page 62
3.3 Foreign Investment in India: 1993?2005......Page 64
3.4 Annual Exports of Goods and Services from India: 1990?2004......Page 66
3.5 Average Telecommunications Tariff Rates in China and India......Page 67
4.1 Software Industry Revenue over Time for China and India......Page 78
4.2 Software Industry Domestic and Export Sales Revenue over Time for China and India......Page 81
5.1 Framework for Explaining Labor Productivity and Unit Labor Cost for Firms......Page 92
9.2 Contributions to Growth of Output of the Nation, 1980?99......Page 164
9.4 Export Intensity of Firms in the IFC Survey......Page 167
10.1 Labor Regulation as a Bottleneck to Business Growth......Page 172
10.7 Unit Labor Costs......Page 178
10.3 Real Interest Rates and Fiscal Deficits, China and India......Page 184
12.1 Factors Identified as Bottlenecks to Growth in China and India......Page 207
12.2 Infrastructure as Obstacles to Growth......Page 218
12.9 Investments in Infrastructure, 1996?2006......Page 219
12.4 Indicators of Power Supply Deficiency from the Public Grid......Page 221
12.5 Indicators of Infrastructure Bottlenecks......Page 222
1.1 Software Industry......Page 25
1.3 Leading Software Services Exporting Countries......Page 27
1.4 Hardware Industry......Page 28
1.5 Size and Growth of the Global Hardware Industry......Page 29
1.7 Number of Firms in the IFC Sample......Page 32
1.8 Main Lines of Business and Production Processes of Firms in the IFC Sample......Page 34
1.9 Characteristics of Firms in the IFC Sample......Page 35
1.10 Export Intensity of Software and Hardware Firms in the IFC Sample......Page 36
1.11 Firm Ownership in the IFC Sample......Page 37
3.1 China: GDP and Investment Trends......Page 61
3.2 India: Average Effective Rate of Protection......Page 63
3.3 India: GDP and Investment Trends......Page 65
3.4 Comparative Performance, 2004......Page 70
4.1 Software Industry Revenues in China and India......Page 77
4.2 Contribution to Software Industry Revenue by Product and Service Type......Page 79
5.1 Labor Demand and Supply......Page 88
5.2 Labor and Management Skill Features of Chinese and Indian Software Firms......Page 90
5.3 Labor Productivity and Value Added by Labor for Chinese and Indian Software Firms......Page 95
5.4 Explaining Labor Productivity and Value Added by Labor in Chinese and Indian Software Firms......Page 96
5.5 Differences between Chinese and Indian Software Firms in Determinants of Labor Productivity and Value Added in 2002......Page 98
5.6 Wage Rates in Chinese and Indian Software Firms......Page 99
5.7 Physical and Financial Capital Needs......Page 101
5.8 Importance of Geographic Location......Page 105
6.1 Management Experience and Firm Growth......Page 108
6.2 Quality Certifications......Page 109
6.3 Entrepreneurship and Independence of Action......Page 114
6.4 Technology Inputs and Outputs......Page 117
6.5 Entrepreneurial Orientation and Technology Activities......Page 120
6.6 Types of International Links......Page 122
6.7 Ownership of the 25 Largest Indian Software Companies in 2004......Page 125
6.9 Cumulative FDI Inflows into China, 1998?2004......Page 128
7.1 Impact of Government Policies on Firm Growth......Page 139
7.2 Infrastructure Impact on Growth......Page 141
7.3 Similarities in Perceptions of Chinese and Indian Institutions......Page 143
7.4 Software Market Competitiveness......Page 145
9.1 Size of Hardware Industry in China, India, and Worldwide......Page 163
9.3 Proportion of Hardware Market by Type of Hardware Product and Process, 2002......Page 166
10.1 Labor Force and Manufacturing Employment in China and India......Page 170
10.2 Labor Flexibility Indicators......Page 171
10.3 Educational Attainment of the Workforce in China and India......Page 173
10.4 Labor Force Composition and Education......Page 174
10.5 Labor Productivity......Page 176
10.6 Wages and Benefits and Labor Cost per Worker, 2003......Page 177
10.8 Physical and Financial Capital......Page 180
10.9 Multicountry Comparison of Savings Rates......Page 181
10.10 Capital Inflows into China and India from Balance of Payments Data, 2004......Page 185
11.1 Experience of Top Managers......Page 190
11.2 Quality Certifications......Page 191
11.3 Independence of Action......Page 192
11.4 Technology Output......Page 193
11.5 Technology Inputs and Outputs......Page 195
11.6 Foreign Ownership......Page 202
11.7 Nonequity Strategic Alliances......Page 203
11.8 Role of Overseas Residents......Page 204
12.1 Doing Business Indicators in China and India, 2005......Page 206
12.2 Indicators of Investment Climate Constraints for Medium to High Tech Manufacturing Industries......Page 208
12.4 Growth Rates of Manufactured Exports, 1990?96......Page 209
12.5 Impacts of Government Policies on Growth......Page 210
12.7 Effects of Regulations......Page 212
12.8 Government Policies with Positive Impact......Page 214
12.10 Computers and Connectivity, China and India, 2002......Page 220
12.11 Infrastructure Impacts......Page 223
12.12 Hardware Market Competitiveness......Page 227
15.1 Chinese and Indian Selected Macroeconomic Trends......Page 243