Services may be India’s only chance
The Brooding Dude
The rise and rise of the IT industry in India, has led to a lot of talk on its potential to alter the economic landscape of the country. “China may have caught the last bus to being an industrialized country, but India would be the first to become a knowledge economy” summarizes this view pretty well.
The ‘knowledge’ economy refers to an advanced stage in a tertiary occupation- or services-based economy. With the phenomenal growth of services such as in IT, R&D and banking & finance, it may only be a matter of time before the sector becomes bigger than agriculture and manufacturing.
Though it has never happened before, there are reasons to believe it could happen in India, though the existing and resultant social inequity related problems pose a significant challenge.
Critics of the “utopia-through-services” story suggest India should take the China route and use manufacturing to uplift the poverty-stricken masses. However major flaws with this argument imply that services could be India’s only chance, and not just one of many options. Understanding the transitions of the economy are vital to surmounting of the social equity related problems. The optimistic view would be that the primary and secondary occupations would grow with the tertiary economy, initially at least to support it, and then to even eradicate mass poverty. A generation down the line India would be at a crossroads – the uplifted masses could either provide the manpower to transition into a services-based future, or manufacturing fired by the developments in the knowledge sector could takeover the economy on its own strengths.
The Brooding Dude Can’t Help Thinking about many things, including on the knowledge economy. This guest post is a summary of a series of articles he posted on his blog recently.