International Trade in Services.pdf - DSpace at Khazar University

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Exporting Information
Technology Services:
In the Footsteps
of India
Michael Engman
Introduction: Why Is Trade in Information
Technology Services of Interest for Developing
Countries
Trade in information technology (IT) services is of interest for developing
countries for several reasons. 1 First, with regard to essential supply-side requirements
commensurate with factor endowments in many developing countries, the
IT service sector makes intensive use of human capital, but is not particularly
reliant on physical capital. An export-oriented IT service sector can thus thrive in
a country with good technical education and limited infrastructure.
Second, widespread connectivity to international information and communication
technology networks and inexpensive technical solutions for online collaboration
and communication enable IT service entrepreneurs to compete for business
independently of location. Electronic supply also reduces trade costs and
allows companies to leverage local cost structures.
Third, a dynamic domestic market, while helpful, is not necessarily a prerequisite
for success. As the Indian case proves, an IT service sector can be nurtured and
thrive without significant local demand. Companies with the necessary talent can
tap into international markets and grow on the back of foreign demand.
Fourth, software encompasses a wide array of products and technologies and is
developed using different techniques such as programming languages, scripting
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