Pan-Pacific Conference XXXIV. Designing New Business Models in Developing Economies

engine, sanitation, health and working conditions
affected more dimensions of people’s lives than the
innovations associated with information technologies
during 1970-2014, which focused more narrowly on
entertainment, communication and processing of
information.
Investments in creating a digital economy may not be as
productive in increasing economic growth relative to
investments in the real economy. This insight is being
lost, for sure, in the current hype about digitization in
India, as illustrated in the following. The designs for
Amaravati, the new state capital of Andhra Pradesh
which aim at creating a ‘smart city’ with fiber optic
connectivity, ignore the fact that its foundations are
being built over natural drains. This will increase the risk
of flooding from the nearby river and rains. It would
have been smart to learn that lesson from the experience
of floods in 2015 which devastated Chennai, a city of
over 10 million people. In Chennai, over the years,
paving over with concrete has reduced the wetlands from
around 600 to 27. In another instance, to quote
columnist Tavleen Singh, “the district collector of
Malappuram in Kerala declared Nedumkayam as India’s
‘first cashless tribal village’ by transferring Rs. 5
digitally into the accounts of 27 people. This was
technically enabled by providing WiFi facilities that later
turned out to be ephemeral. This ‘digital’ dream village
has neither water nor toilets. This is true of many of our
6,00,000 villages, so making Swachh Bharat (“Clean
India”) a reality is a huge challenge”
[7] Frey, Carl Benedikt and Michael A. Osborne
“The future of employment: how susceptible
are jobs to computerisation?” September 17,
2013
http://www.oxfordmartin.ox.ac.uk/downloads/a
cademic/The_Future_of_Employment.pdf
Accessed on February 6, 2017
[8] Gordon, Robert J. The Rise and Fall of
American Growth: The U.S. Standard of
Living since the Civil War, Princeton
University Press, 2016
[9] McAfee, Andrew and Erik Brynjolfsson, The
Second Machine Age: Work, Progress, and
Prosperity in a Time of Brilliant Technologies,
W.W. Norton and Company, 1st edition, 2014.
[10] Natarajan, R. “India’s Manufacturing Sector:
Sources of Competitiveness,
Constraints, and Prospects,”
Academy of Taiwan Business Management
Review, Vol. 4, No. , 118-131, April
2008.
[11] ]Reserve Bank of India, “Estimates of
Productivity Growth for Indian Economy”
Reserve Bank of India Report June 2014
[12] Rodrik, Dani “Premature Deindustrialization,”
NBER Working Paper No. 20935 Issued in
February 2015
http://www.nber.org/papers/w20935.pdf
Accessed on February 6, 2017
[13] Zhong, Raymond “WSJ 2050 Manufacturing
Bust,” Wall Street Journal, November 24, 2015
CONCLUSION
Prime minister Modi’s government is making big bets on
digital technologies to deliver higher economic growth.
They have to put in place clear, supporting policies and
make complementary investments in education and
infrastructure. Moreover, policy makers have to
recognize that the brick and mortar economy is still as
important - if not more - as the digital economy.
REFERENCES
[1] Amirapu, Amrit and Arvind Subramanian,
“Manufacturing or Services? An
Indian Illustration of Development Dilemma,”
Working Paper.
[2] Dasgupta, Sukti, and Ajit Singh,
“Manufacturing, Services and Premature
Deindustrialization in Developing Countries: A
Kaldorian Analysis,” UNU‐WIDER, United
Nations University Research Paper, No.
2006/49, 2006.
[3] Deloitte and US Council on Competitiveness
“Global Manufacturing Competitiveness
Index,” Deloitte and US Council on
Competitiveness, 2016.
[4] The Economist, “Special Report:
Manufacturing and Innovation,” The
Economist, April 21, 2012
[5] The Economist, “Special Report: The World
Economy,” The Economist, October 4, 2014
[6] The Economist, “The Masala Mittelstand,” The
Economist, August 11, 2012
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