Abstract
Information-technology-enabled services (ITES) has become a sector of promise for many low- and middle-income economies seeking to leapfrog industrialization and build knowledge-intensive economies. Yet as a sector defined by accelerating processes of commodification and skill elimination, its long-term developmental promise must be carefully scrutinised. Analysing the development of the sector in India, the Philippines and Kenya the paper reveals both the contextual nature of past successful ITES policies and their developmental vulnerabilities. Drawing on literature on industrial policies and global value chains and production networks, the paper critiques the existing policy approaches by arguing that they are largely focussed on enabling value and employment creation and that they pay insufficient attention to questions of value capture and long-term socio-economic transformation.
Highlights
information-technology-enabled services (ITES) as the Road to Economic Development?As the traditional development path associated with export-oriented manufacturing has narrowed due to the integration of China into the global economy and the resulting shifts in terms of trade (Jenkins and Edwards 2015), services have emerged as a potential new path (Dossani and Kenney 2007; UNCTAD 2004)
Such hope has been pronounced in African countries, where a high number of workers are employed in low-productivity agriculture and where economies are struggling with de-industrialization
In contrast to the experience of India, in which domestic-owned companies have been able to capture a larger share of the global market over time and develop strategic network positions as a result, the Philippines ITES sector depends increasingly on foreign investors, who account for 93% of the sector (Yi 2012, p. 137)
Summary
ITES as the Road to Economic Development?As the traditional development path associated with export-oriented manufacturing has narrowed due to the integration of China into the global economy and the resulting shifts in terms of trade (Jenkins and Edwards 2015), services have emerged as a potential new path (Dossani and Kenney 2007; UNCTAD 2004). In the era before global value chains, he postulated that, while innovation initially occurs in high-income countries, its production shifts into lower-wage economies where firms and workforces are able to offer competitive cost-capability ratios as a product’s technology matures.
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