Manufacturing vs. Services and the Role of Information Technology

Abstract

The role of information technology is often debated in the context of economic development of the developing countries. In order to understand the role technology plays in the structural change of the economy, the chapter analyzes the case of India, which, according to many researchers, has experienced an “idiosyncratic” pattern of structural changes since its independence compared to many countries. This is evident from the fact that the growth of Indian economy has been driven by the services sector rather than manufacturing, which prompted many researches to conclude that India has leapfrogged the phase of industrialization. This chapter examines the impact of services-led growth and the role of information technology in India through a comparative analysis of manufacturing versus services in export performance and employment scenario. The chapter concludes that India needs a more broad-based policy of technology adoption, not only to sustain its services-led growth but also to boost its manufacturing sector as well as make the economic development more inclusive.