DDP 729. Nirupam Bajpai and Anupama Dokeniya. "Information Technology-Led Growth Policies: A Case Study of Tamil Nadu." October 1999. 30 pp.

The Tamil Nadu government has expressed an intent and developed a policy framework to accord primacy to an informatics-led growth strategy in accordance with global trends in this area. The policy covers various aspects of information-led growth – creating a robust domestic IT industry- ranging from the application of information technology to various aspects of life, to the growth of services, and increasingly, the development of a robust information infrastructure backbone on which information goods and services will ride. This paper discusses the information technology policy of the Tamil Nadu government assessing these various aspects, and the potential linkages between them.

There are some crucial inputs into an information infrastructure initiative: (1) research and training institutions; (2) a local labor market with quality engineers and technicians; (3) favorable tax and credit incentives; (4) bureaucratic flexibility and efficiency, institutional support; and (5) supporting infrastructure: a good transportation system, adequate telecommunications.

On the demand side are the applications that need to be encouraged for efficiency gains; for diffusing the benefits of the information revolution through increased citizen participation; and for creating demand as a spur to the information technology industry itself. The impact of a robust IT industry on development of the regional/local economy as a whole will depend on various factors: increased employment-generation; efficiency gains from the application of information technology; and foreign capital inflow, resulting both from the foreign investment in the local IT industry and export earnings gained by progressively capturing higher value-added segments of the global IT market.

The paper argues that the extent to which the benefits of the ‘information revolution’ are actualized and the potential of IT is harnessed will depend on the success with which countries (and regional sub-divisions) are able to understand and incorporate into policy and initiatives these inter-linkages between various components of an IT strategy, as well as the specific impact of IT on economic growth and development. The Tamil Nadu government’s IT strategy, although progressive and comprehensive, is deficient in its understanding of these inter-linkages, and needs to address them to ensure that a flourishing IT industry translates into regional development.

JEL Codes: L86, O38

Keywords: Information Technology, Growth Strategy, and Tamil Nadu.

Nirupam Bajpai is an Associate at the Harvard Institute for International Development and the Director of the India Program at HIID.

Anupama Dokeniya is a Consultant at the Harvard Institute for International Development (HIID).