Analysis On The Economic Effects Of Indian IT Industrial Clusters

India's IT industry has been developing rapidly since the 1990s, and became the second largest software exporter only after the United States. Adopting the form of industrial clusters to develop IT industry is the main reason for its great achievements. Industrial cluster is the new development of industrial organization and a new phenomenon of regional economic development. As the spatial concentration of industries, many economists have studied the issue. Industry Cluster has great competitive advantages and plays an important role in regional economic development. This paper is the study of the economic effects of the Indian IT industry cluster and its competitive advantages on the economy. The article is divided into three parts: the preface, the main body and the conclusion.The text is divided into four parts. Part one is the concept of industrial clusters and the origin of theoretical development. The second part is the development of the Indian IT industry clusters. The third part analyzes the economic effects of the Indian IT industry cluster and the fourth is about the development of China's IT industry clusters and what China can learn from the development of India's IT industry.Part One: This part starts from the concept of industrial clusters. Industry Cluster refers to the phenomenon that in a particular area (usually with a leading industry as the core) a large number of closely linked industrial enterprises and related supporting industries concentrate in space and form a strong sustainable competitive advantage. It also discusses the characteristics and classification of industrial clusters. Then it analyzes the theoretical sources of the development of industrial clusters, basically involving Marshall's external economic theory, Weber's regional economic theory, Krugman's economics of new geography, Porter's new competition economics and Peru's theory of pole of growth.Part II: Based on the theory, the development of Indian IT industry clusters is introduced. First, it tells the formation process of the Indian IT industry clusters, which can be divided into three phases, namely: IT industry birth stage, development and the formation of IT industry cluster. Secondly, the Indian government's role in the formation and development of industry cluster is analyzed. Secondly Indian IT industrial clusters'operation system are mainly reflected as four aspects: to drive industrial cluster by the use of comparative advantage, to improve and support the system of policies for industrial clusters, to construct the regional innovation network and to define its position in the global production chain. The final section states the development strategy. That includes industrial policy, Bangalore's IT talent strategy, Bangalore's corporate strategy, stringent industry standards, strengthening protection of intellectual property rights and risky investment.Part III: The Indian IT industry clusters have played a good economic effect. First, Indian IT industry clusters have strong competitive advantages. India's IT industry clusters have not only the same advantages as other industrial clusters, but also their own features, mainly in the following five aspects : cost advantages, effect of resources attraction, the knowledge spillover effect, Cluster network and market share. Then it discusses Indian IT industry clusters'influences on India's economic development, which includes spurring the economic growth, creating employment opportunities, improving the balance of international payments and increasing foreign exchange reserves and increasing individual income taxes to make up part of the business tax loss.Part IV: Indian IT industrial clusters made such great achievements, while what is the current situation about China's IT industry clusters? What can we learn from the development of Indian IT industry clusters? This part starts from the current situation of China's IT industrial clusters. Although there has been great development in China's IT industrial clusters, there are still problems that can not be ignored. The main problem is the loss of internal mechanism of most IT industrial clusters, which is reflected as follows: the industry network of cooperation and division between enterprises in the cluster has not yet formed; cooperative mechanism of"production and study"is still not mature; incubators are performing poorly; intermediary services are imperfect. China is very similar to India in politics, economy, population, education, and so on. Therefore, India's experience could be our example. A cluster model is the main reason for the success of India's IT industry. China can follow India's IT industry model to promote the development of China's IT industry from every aspects. The breadth and depth of Industry Cluster determine its contribution to competitive advantage. India's industrial clusters have exceeded ours in size and depth, in particular, known as "Asia's Silicon Valley" of Bangalore, and its size and contribution to the software industry in India are second to none for China. In order to develop China's IT industry clusters we have to continue to construct the base and the park of IT industry to expand the breadth and depth of our industrial clusters. We have to foster IT clusters'internal mechanism, to nurture our industries, to train IT personnel, to accelerate reform on scientific research and structural system, to improve the environment for the development of IT industry and create a strict quality assurance system.In conclusion, the author briefly summarizes the contents of the study and also points that there are some problems not covered in the above issues because the author's knowledge is very limited, for example, quantitative analysis of industrial clusters, the analysis model of cluster's economic effects, the ability to nurture the innovation. All of those problems need further study.