Competitive advantage is defined as the relative advantage, in terms of the lower cost of production of a good, of a nation in allocating its productive resources.
The software industry in India has lower cost of wages, higher skill sets and human capital,
Firm strategy, structure, and rivalry-
Firm strategy is very simple; they hire low-wage and high-skill-set workers.
The industry has higher demand than do other industries for exportation.
Related and supporting industries-
The supporting industries include shipping and transportation, which are all highly developed in India. Market access is tremendous. Software can be sold at near-instantaneous rates through the world wide web.
Taxation on production is strangely high in India. Export taxes are high. There are other taxes as well, including taxation on the capital value of assets.
I would suggest the market would stay at a growth rate relatively similar to the rest of India's national production supply market. The rapid increase in commodity prices after a very brief period of deflation suggests the market is inflating. Higher demand will not allow increase in investments, and India does not have as much capital stock as do first world nations. The world-wide savings bubble is not increasing as demand-pull inflation is predominant, so India will not enjoy any increase in investment in productive assets. Investment in alternative currencies and stores of value, if India redirects their investment, would increase productivity in terms of yields on savings. So if India finds more reasons to invest because of enhanced money supply market changes, then India will outperform other markets. If not, they will not improve relative to other nations.
Apr 20th, 2015
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