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Between dependency and autonomy: India's experience with the international computer industry

Published online by Cambridge University Press:  22 May 2009

Joseph M. Grieco
Joseph M. Grieco
Affiliation:
Assistant Professor of Political Science at Duke University, Durham, North Carolina.
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Abstract

India's experience with the international computer industry serves as a key test of the “bargaining school” and the “Marxist-dependencia school” on relations between developing countries and multinational enterprises. India changed (and improved) its performance over time in reformulating its ties with the international computer industry. How did changes in international computer technology and industrial structure combine with Indian domestic institutional and political developments to yield an improved position for India in international computing? The case study illustrates the overall analytical superiority of the bargaining school over the Marxist-dependencia school. It also suggests a modest revision of the bargaining school's understanding of the speed at which certain developing countries are attaining the capability to negotiate successfully with multinationals in high-technology industries.

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Articles
Information
International Organization , Volume 36 , Issue 3 , Summer 1982 , pp. 609 - 632
Copyright
Copyright © The IO Foundation 1982

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References

The author thanks Duncan L. Clarke, Jack Donnelley, Glenn Fong, Peter J. Katzenstein, Michael Mastanduno, John J. Mearsheimer, Richard N. Rosecrance, and Louis T. Wells for their valuable comments on various drafts of this article. The author is grateful to the following institutions for their generous support of the research reported here: at Cornell University, the Center for International Studies, the Peace Studies Program, and the South Asia Program; at Princeton University, the Center of International Studies; at Harvard University, the Division of Research in the Graduate School of Business Administration; the Institute for the Study of World Politics; and the American Institute of Indian Studies. Of course, all statements of fact and opinion are the sole responsibility of the author.

1 Important statements by include, Raymond Vernon “Foreign-Owned Enterprises in the Developing Countries”, Public Policy 15 (Boston: Graduate School of Business Administration, Harvard University, 1966), pp. 361–80Google Scholar; “Long-Run Trends in Concession Agreements”, Proceedings of the American Society of International Law, April 1967, pp. 85–89; “The Power of Multinational Enterprises in Developing Countries”, in Carl-Madden, , ed., The Case for the Multinational Corporation (New York: Praeger, 1975), pp. 151–83Google Scholar; Sovereignty at Bay: The Multinational Spread of U.S. Enterprises (New York: Basic Books, 1971), pp. 46–59, 105–6, 256–57Google Scholar; Storm Over the Multinationals: The Real Issues (Cambridge: Harvard University Press, 1977), pp. 139–74, 194–99CrossRefGoogle Scholar. Important discussions by Moran, Theodore include Multinational Corporations and the Politics of Dependence: Copper in Chile (Princeton: Princeton University Press, 1974)Google Scholar; and “Multinational Corporations and Dependency: A Dialogue for Dependents and Non-Dependentistas”, in Caporaso, James A., ed., Dependence and Dependency in the Global System, special issue of International Organization 32 (Winter 1978), pp. 170–200Google Scholar. Also see Kindleberger, Charles, American Business Abroad: Six Lectures on Direct Investment (New Haven: Yale University Press, 1969), pp. 147–59Google Scholar; Mikesell, Raymond F., “Conflict in Foreign Investor-Host Country Relations: A Preliminary Analysis”, in Mikesell, , ed., Foreign Investments in the Petroleum and Mining Industries (Baltimore: Johns Hopkins Press [for Resources for the Future, Inc.], 1971), pp. 29–55Google Scholar; Bergsten, C. Fred, “Coming Investment Wars?”, Foreign Affairs 53 (10 1974), pp. 135–52CrossRefGoogle Scholar; and Bergsten, , Horst, Thomas, and Moran, , American Multinationals and American Interests (Washington, D.C.: Brookings, 1978), pp. 369–81Google Scholar.

2 Important Marxist-dependencia analyses of the multinational corporation include Cardoso, Fernando Henrique, “Associated-Dependent Development: Theoretical and Practical Implications”, in Stepan, Alfred, ed., Authoritarian Brazil: Origins, Policies, and Future (New Haven: Yale University Press, 1973), pp. 142–76Google Scholar; Cardoso, and Faletto, Enzo, Dependency and Development in Latin America, 2d ed. (Berkeley: University of California Press, 1979), pp. 159–64Google Scholar; Emmanuel, Arghiri, “The Multinational Corporations and the Inequality of Development”, International Social Science Journal 28 (1976), pp. 760–64Google Scholar; Evans, Peter, Dependent Development: The Alliance of Multinational, State, and Local Capital in Brazil (Princeton: Princeton University Press, 1979)Google Scholar; and Hymer, Stephen, “The Multinational Corporation and the Law of Uneven Development”, in Bhagwati, J., ed., Economics and World Order: From the 1970s to the 1990s (New York: Free Press, 1972), pp. 113–40Google Scholar. Finally, see Theotonio Dos Santos, “The Structure of Dependency”, and Celso Furtado, “The Concept of External Dependence in the Stages of Underdevelopment”, both in Wilbur, Charles K., ed., The Political Economy of Development and Underdevelopment (New York: Random House, 1973)Google Scholar.

3 See Eckstein, Harry, “Case Study and Theory in Political Science”, in Greenstein, Fred I. and Polsby, Nelson W., eds., Strategies of Inquiry, vol. 7 of the Handbook of Political Science, edited by Greenstein, and Polsby, (Reading, Mass.: Addison-Wesley, 1975), pp. 79–137Google Scholar. India's experience with computers does not constitute an Ecksteinian “critical case” for either the bargaining or the Marxist-dependencia school. Such a case would involve the most powerful multinational enterprises (which could be those firms in the computer industry, according to both schools) and the weakest developing country (which is certainly not India). Yet within the developing world “strong” multinationals (i.e., those in high technology manufacturing industries) have extensive operations only in relatively advanced developing countries. Hence, for the foreseeable future most instances of significant bargaining between “strong” multinationals and developing countries are likely to involve the more advanced countries.

4 According to one important standard for comparing technological intensiveness of manufacturing industries-annual research and development expenditures as a percentage of total yearly revenue-data processing is technologically the most dynamic industry at present. For a discussion of the measure, see Vernon, Raymond, Gruber, William, and Mehta, Dileep, “The R&D Factor of International Trade and in International Investment of the United States”, in Wells, Louis T. Jr ed., The Product Life-Cycle and International Trade (Boston: Graduate School of Business Administration, Harvard University, 1972), pp. 114–15Google Scholar. For a comparison of 31 manufacturing industries, see the annual survey of research and development in American industry, Business Week, 27 06 1977, pp. 62–84Google Scholar; 3 July 1978, pp. 48–77; and 2 July 1979, pp. 52–72. Also, see U.S., National Science Foundation, Research and Development in Industry: Technical Notes and Statistical Tables (Washington: NSF, 1978), p. 34Google Scholar.

5 For these arguments see Vernon, , Sovereignty at Bay, pp. 105–6, 256–57Google Scholar; “Power of Multinational Enterprises”, pp. 167–68; Storm, pp. 71–72. Also see Bergsten, , “Coming Investment Wars”, p. 139Google Scholar; and Bergsten, , Horst, , and Moran, , American Multinationals, pp. 377–80Google Scholar.

6 Evans, , Dependent Development, pp. 199–212Google Scholar, gives the fullest account from the Marxist dependencia viewpoint of the inhibiting effects of technology on host country bargaining power. Cardoso, and Faletto, , Dependency and Development, pp. 161–62Google Scholar, see the technology problem as existing not only between a specific enterprise and the government but also between the advanced capitalist society from which the firm originates and the developing country represented by the government.

7 On these expectations, see India (Republic), Electronics Committee of India, Electronics in India (New Delhi, 1966)Google Scholar; India (Republic), Lok Sabha, Parliamentary Debates, 3rd Series (3 03 1966), pp. 3885–3886Google Scholar; and India (Republic), Indian Investment Centre, India Invites Foreign Capital (New Delhi: Caxton Press, 1965)Google Scholar.

8 Baranson, Jack, “Technology Transfer Through the International Firm”, American Economic Review 60 (05 1970), p. 439Google Scholar; and IBM Interview Materials (February 1979). Interviewees were granted anonymity by the author, but interviewees understood that notes of conversations were available to the author's dissertation committee at Cornell University. Interviews were conducted in North Tarry town, New York (06&09 1978)Google Scholar; London (July–August 1978, and January 1979); Paris (July 1978 and January 1979); Detroit (October 1978); New Delhi (January–February 1979 and January 1981); and Bombay (February 1979). For the results of the thesis research, see Grieco, Joseph Morris, “Between Dependence and Autonomy: India's Experiences with the International Computer Industry” (Ph.D. diss., Cornell University, 1982)Google Scholar.

9 International Computers and Tabulators Manufacturing Company, Prospectus (Bombay, 24 01 1964), pp. 1, 6Google Scholar; and First Annual Report and Accounts (Bombay, 8 05 1964), p. 6Google Scholar.

10 ICL/London (July 1978) and ICL/India (February 1979) Interview Materials; Burroughs/Detroit (October 1978) and Tata-Burroughs/Bombay (February 1979) Interview Materials; and IBM Interview Materials (June-July 1978, February 1979).

11 ORG, DCM, IDM, and HCL Interview Materials (January 1981); and IBM Interview Materials (June–July 1978, September 1978, February 1979).

12 Ibid., and Tata-Burroughs Interview Materials (February 1979) and “Growth of Indigenous Effort”, Commerce (Bombay), 31 05 1980, p. 925Google Scholar; and International Computers India Manufactures, Annual Report and Accounts, 1979–1980 (Bombay, 12 1980), pp. 17–32Google Scholar.

13 IBM Interview Materials (June–July 1978, and telephone interview, April 1980); and “ICL Asked to Make 100 Medium-Range Computers”, Economic Times (Bombay), 19 11 1977, p. 6Google Scholar.

14 For a discussion of the invention and evolution of the transistor, see “The Solid State Era”, chap. 5 of Fifty Years of Achievement: A History, special issue of Electronics, 17 April 1980, pp. 216–73. Also see Shepherd, A. A., “Semiconductor Device Developments in the 1%0's”, Radio and Electronic Engineer 42 (01–02 1973), pp. 11–12CrossRefGoogle Scholar. Also see Weiner, Charles, “How the Transistor Emerged”, IEEE Spectrum 10 (01 1973), pp. 24–33CrossRefGoogle Scholar; and Braun, Ernest and MacDonald, Stuart, Revolution in Miniature: History and Impact of Semiconductor Electronics (Cambridge: Cambridge University Press, 1978), pp. 11–66, 83–86Google Scholar. On the integrated circuit see Braun and MacDonald, pp. 101–120, and Wolff, M., “The Genesis of the Integrated Circuit”, IEEE Spectrum 13 (08 1976): 44–53CrossRefGoogle Scholar. On process improvements for integrated circuits see the articles by Noyce, Robert N., Holton, William C., and Oldham, William G. in the special issue on microelectronics, Scientific American 237 (09 1977)CrossRefGoogle Scholar.

15 Digital Equipment Corporation, Annual Report 1975 (Maynard, Mass., 1975), p. 11Google Scholar.

16 On the microcomputer see Savin, Dwight H., Microprocessors and Microcomputer Systems (Lexington, Mass.: Lexington Books, 1977)Google Scholar; Bylinsky, Gene, “Here Comes the Second Computer Revolution”, Fortune, 11 1975, pp. 134–39Google Scholar; Rose, Kenneth, “The Microcomputer Revolution”, Modern Materials Handling 34 (08 1979), pp. 178–85Google Scholar; and Sippl, Charles J., Microcomputer Handbook (New York: Petrocelli/Charter, 1977)Google Scholar.

17 See Minaldi, Bruce, “A Guide to Data Storage for Micros and Minis”, Instrument and Control Systems 50 (08 1977), pp. 41–43Google Scholar; also see Yencharis, Len, “Micro/Mini Storage Peripherals Driven by Disk, Tape Advances" Electronic Design, 25 10 1979, p. 62Google Scholar, and Juliessen, J. Egil, “Where Bubble Memories Will Find a Niche”, Mini-Micro Systems 12 (07 1979), p. 60Google Scholar.

18 These data were gathered from the annual reports, 10-K Forms, and prospectuses of 21 U.S. computer manufacturing enterprises, including the top 10 firms in the industry.

19 International Computers Ltd., Annual Report and Accounts 1977 (London, 12 1977), p. 11Google Scholar; and Rurak, Marilyn, The American Computer Industry in Its Competitive Environment (Washington: U.S. Department of Commerce, 1976)Google Scholar.

20 Figures are taken from the annual reports and 10-K Forms of the respective firms. On the integrated circuit industry, see U.S. Congress, Senate, Committee on Commerce, Science, and Transportation, Industrial Technology (Washington, D.C.), 30 10 1978Google Scholar, and Mackintosh, I. M., “Integrated Circuits: The Coming Battle”, Long Range Planning 12 (06 1979): 28–37CrossRefGoogle Scholar.

21 See Narasimhan, R., “Meaningful Goals in Computer Development, Production, and Use”, in India (Republic), Electronics Committee of India, Electronics (Bombay: Electronics Commission, 1971), pp. 372–74Google Scholar.

22 On the entitlement program see India (Republic), Lok Sabha, Public Accounts Committee, Two-Hundred and Twenty-First Report: Computerization in Government Departments (New Delhi: Lok Sabha Secretariat, 04 1976), pp. 196–98Google Scholar.

23 IBM Interview Materials (July 1978).

24 See India (Republic), Technical Panel on Minicomputers, “Report of the Panel on Minicomputers”, Electronics: Information and Planning (Bombay) 1 (02 1974), pp. 478–517Google Scholar; see also the various annual reports of the Department of Electronics.

25 On the “New Strategy” to allow wholly-indigenous entrants into the microcomputer sector, see statement of Prime Minister Desai, Moraji in India (Republic), Lok Sabha, Lok Sabha Debates, 6th Series, 11 (15 03 1978), pp. 186–90, and 24(28 March 1979), pp. 233–36Google Scholar. Also see “Licensing and Development of Computer Industry—Government Policy”, Electronics for You (New Delhi) 12 (03 1980), p. 12Google Scholar; and Department of Electronics, Annual Report, 1977–1978 (New Delhi, 1978), p. 102Google Scholar.

26 For a discussion of this policy fragmentation, see the Public Accounts Committee, 221st Report: Computerization.

27 For several references to the struggle see Electronics Committee of India, Electronics.

28 In 1971, the individual selected to head both the Commission and the Department was M. G. K. Menon, who was until then director of the Tata Institute for Fundamental Research, which is under the Atomic Energy Commission. His key deputy in the Department was A. Parthasarathi, who had been a principal officer in the AEC. An important analyst for the AEC, N. Seshagiri, was chosen to head the Electronics Commission's intelligence gathering and analysis unit.

29 On funding for ECIL, see Vikas, Om, “Indigenous Development of Computer Systems, Peripherals, and Computer Communications Facilities”, Electronics: Information and Planning 5 (08 1978): 773–842Google Scholar; and annual reports of the Department of Electronics. It should be noted that the 1975 grant of authority over computer imports to the Department formalized practices the Department had begun in 1971 and 1972.

30 ECIL Interview Materials (January 1981).

31 India (Republic), Department of Electronics, Annual Report, 1971–1972 (New Delhi, 1972), pp. 23–24Google Scholar.

32 Interview, former official in Department and Commission (January 1981).

33 Interview, Manager, Data Processing Department, India Public Sector Enterprise (January 1981).

34 See “New Import Policy for Software Exports”, Times of India (New Delhi), 3 01 1981Google Scholar, and India (Republic), Lok Sabha, Lok Sabha Debates, 7th Series, 2 (8 03 1980), p. 191Google Scholar.

35 In an interview with the author (January 1981), an official in the electronics policy area indicated that the newspaper articles, together with parliamentary questions, letters, telephone calls, and meetings, were the main means of attack on the Commission and Department in 1977–1978.

36 Ibid..

37 See “Computer Output Checked”, Financial Express (Bombay), 20 02 1978Google Scholar; “Policy on Small Computers Soon”, Economic Times, 12 January 1978; “All Free to Make Minicomputers”, Economic Times, 18 February 1978; “Minicomputer Policy Ready”, Economic Times, 6 March 1978; “Decision Soon on Minicomputers”, Economic Times, 14 August 1978. The charge of “collusion” was made in the 12 January Economic Times article.

38 India (Republic), Lok Sabha, Lok Sabha Debates, 6th Series, 11 (15 03 1978), p. 190Google Scholar; 17 (2 August 1978), p. 98; and 20 (13 December 1978), pp. 63–64.

39 DCM and HCL Interview Materials (January 1981).

40 “Electronics Policy to be Reviewed”, Economic Times, 11 December 1978.

41 “Licensing, Growth Policy Drawn Up”, Economic Times, 14 November 1979. Also, see “Development of Computers”, Commerce, 1 December 1979, pp. 1085–86.

42 For comparisons of general economic statistics, see International Bank for Reconstruction and Development, World Development Report 1979 (Washington: IBRD, 1979), pp. 126–27, 136–37Google Scholar; Wilke, J. W., Statistical Abstract of Latin America vol. 20 (Los Angeles: UCLA, 1980), pp. 267, 282Google Scholar; Central Intelligence Agency, National Basic Intelligence Factbook (Washington, D.C.: GPO, 01 1979 and January 1980)Google Scholar; and IBRD, World Tables 1976 (Washington: IBRD, 1976), pp. 61, 79, 121, 169, 179, 243Google Scholar. For comparisons of national scientific capabilities, see United Nations Educational, Scientific and Cultural Organisation, Statistical Yearbook (Paris: UNESCO, 1979), pp. 755–61Google Scholar.

43 For a “critical but sympathetic” discussion of the delinkage strategy, see DiazAlejandro, Carlos F., “Delinking North and South: Unshackled or Unhinged”, in Fishlow, Albert et al. , Rich and Poor Nations in the World Economy (New York: McGraw-Hill for the Council on Foreign Relations, 1980s Project, 1977)Google Scholar. For a recent analysis of the strategy and its applications to Tanzanian trade policy, see Biersteker, Thomas J., “Self-Reliance in Theory and Practice in Tanzanian Trade Relations”, International Organization 34 (Spring 1980): 229–64CrossRefGoogle Scholar. As Biersteker notes, most dependency writers, and other critics of international capitalism such as Johan Galtung, Immanuel Wallerstein, and Arghiri Emmanuel, advise developing countries that they should delink from and, perhaps later, “restructure” their relations with advanced capitalist societies.