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The rise of Indian software industry Question 1 To what extent the theory of Comparative advantage explain the rise of Indian software industry? Answer Theory of Comparative Advantage David Ricardo has developed theory of Comparative Advantage. Which was later developed by Heckscher-Olin. They all argued that all countries have different factor endowments of labour, land and capital inputs. Therefore, Countries should be able to specialise in and export products that they can efficiently produce. Comparative advantage …

…required and aspects of the model would appear to have played very little role in the development of the industry. If parsimony were taken into consideration, the Hecksher-Ohlin theory would seem to provide the best explanation. References http://www.hindu.com/thehindu/biz/2002/03/14/stories/2002031400150100.htm http://itfriend.mit.gov.in/adavantageindia/industrialprofile.asp http://www.btimes.co.za/98/1004/tech/tech03.htm http://www.outsource2india.com/why_outsource/articles/MacroeconomicsofOutsourcing2.pdf http://www.indiatoday.com