Abstract
The study examines the behavior pattern of the Indian Service Firms in matters related to the research and development (R&D) expenditure since 1999. A Firm-Level Analysis was done using data from Centre for Monitoring of the Indian Economy, prowess database. With the advent of new services over time, many non-tradeable services have become increasingly tradeable henceforth, the exports of services have improved and surpassed the merchandise exports. Taking this backdrop in mind, the study examines the role of R&D in promoting service exports. Results conclude that the innovation activity performed by the Indian service firms were less than 10%. The majority of innovating service firms were found to be firms concentrated in trading, gas and distribution, electricity generation, business consultancy, ITES, computer software, and other miscellaneous services. Hence, the more technology led innovation requires to be done as the innovation propensity of the service firm has declined.
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Notes
- 1.
The growth in the Indian services is relatively labor intensive in nature as compared to manufacturing or mining.
- 2.
This share is more or less higher than most of the advanced countries with the exception of South Korea.
- 3.
Here, services signify the financial and communication services being the major technology adopters within the services sector.
- 4.
Microsoft is classified as a software company, and while it does supply computer services but of course a great deal of Micro-soft’s activity concerns packaged software-more a manufactured product like print publications than a classic computer service.
- 5.
Business services and knowledge processing outsourced services
- 6.
R&D on banking services encompasses banking and insurance mathematical research relating to financial risk analysis, development of risk models for credit policy, experiment development of new software for home banking.
- 7.
The year 1999 has been chosen due to the availability of data for service firms in CMIE (prowess) database and also to see the impact of the second economic reforms undertaken by India.
- 8.
The exceptions include airport transport infrastructure services, banking services, and courier services.
- 9.
Data on service firms available till the year 2014 as per reporting by the Indian service firms to CMIE.
- 10.
Data by the Indian service firms have been reported until the year 2009 in the prowess database.
- 11.
The miscellaneous service sector comprises a wide array of service firms like repair services, commission agent’s services, sanitary services, and others.
- 12.
Information technology accounted for nearly $108 billion worth of services exports in the last financial year, exporting primarily to destinations like USA, UK, and Europe.
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Mukherjee, S. (2018). Pattern of R&D Expenditure in the Indian Service Sector: A Firm-Level Analysis Since 1999. In: Tan, LM., Lau Poh Hock, E., Tang, C. (eds) Finance & Economics Readings. Springer, Singapore. https://doi.org/10.1007/978-981-10-8147-7_9
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