Working Paper: NBER ID: w10538
Authors: Ashish Arora; Alfonso Gambardella
Abstract: The spectacular growth of the software industry in some non-G7 economies has aroused both interest and concern. This paper addresses two sets of inter-related issues. First, we explore the determinants of these successful stories. We then touch upon the broader question of what lessons, if any, can be drawn from for economic development more generally. Finally, examining the long term implications of offshoring of software, we conclude that it is unlikely to pose a long term threat to American technological leadership. Instead, the U.S. economy will broadly benefit from the growth of new software producing regions. The U.S. technological leadership rests in part upon the continued position of the U.S. as the primary destination for highly trained and skilled scientists and engineers from the world over. Though this is likely to persist for some time the increasing attractiveness of foreign emerging economy destinations is a long-term concern for continued U.S. technological leadership.
Keywords: No keywords provided
JEL Codes: O3; O5
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Growth of software industry in India (L86) | Benefits for US economy (F69) |
| Growth of software industry in Ireland (L86) | Benefits for US economy (F69) |
| Growth of software industry in Israel (L86) | Benefits for US economy (F69) |
| MNC presence (F23) | Increased demand for local competencies in software industries (L86) |
| Outflow of human capital from India (F22) | Implications for US economy (F69) |
| Growth of Indian software exports (F10) | US retains higher-level design and innovation tasks (O39) |
| Increasing attractiveness of foreign destinations for skilled labor (J61) | Long-term concern for US technological leadership (O33) |