The Big Question Why do some Indian states succeed more than others in global markets? The fascinating story of Tamil Nadu and Uttar Pradesh reveals how local factors shape global success.
The Export Showdown: Tamil Nadu vs. Uttar Pradesh By the Numbers:
- Tamil Nadu’s exports: $24.8 billion (2000-2008)
- Uttar Pradesh’s exports: $12.8 billion (2000-2008)
- Tamil Nadu’s export intensity: Double digits since 1997
- Uttar Pradesh’s export intensity: Single digits throughout
The Secret Recipe for Export Success
1. The Power of Local Markets The Home Advantage
- Tamil Nadu: More sophisticated consumer base, higher per capita income
- Uttar Pradesh: Larger absolute market size but less diversified demand
- Why it matters: Sophisticated local demand prepares firms for global competition
2. The Innovation Engine Knowledge is Power
- Tamil Nadu: Triple the patent applications of UP
- Higher technological specialization
- Growing focus on high-tech manufacturing
- Result: Greater competitive edge in global markets
3. The Talent Pool Skills that Pay the Bills
- Tamil Nadu: Higher education enrollment of 1,597 per 100,000 people
- Uttar Pradesh: 1,155 per 100,000 people
- Impact: Better skilled workforce for export-oriented industries
4. The Infrastructure Edge Tamil Nadu’s lead in:
- Power generation: 4x higher
- Telecommunication density: 2x better
- Banking access: 7x more credit availability
- Plus: Crucial port access
Who’s Driving Exports? The Export Champions
- Young firms leading the charge
- Large-sized companies dominating
- R&D-intensive enterprises
- Foreign-owned companies
- Business groups (especially in Tamil Nadu)
Policy Playbook What’s Working:
- Targeted export promotion agencies
- Special economic zones
- Industry-specific clusters
- Fiscal incentives
- Infrastructure development
Lessons for Other Regions
- Invest in local innovation systems
- Build quality infrastructure
- Develop skilled workforce
- Create export-friendly policies
- Foster industrial clusters
The Road Ahead Key Challenges:
- Upgrading infrastructure
- Enhancing skill development
- Supporting smaller firms
- Strengthening local innovation
- Improving policy implementation
Practical Takeaways For Policymakers:
- Focus on comprehensive ecosystem development
- Target high-tech manufacturing
- Invest in education and skills
- Strengthen infrastructure
- Support local innovation
For Businesses:
- Invest in R&D
- Build export capabilities
- Leverage local advantages
- Focus on skill development
- Utilize government support programs
Academic Abstract:
Traditionally, the export performance of the economies was analysed taking individual countries as the locational units, which were not able to explain the subnational, regional or spatial disparities within the geographically vast countries like India, because a huge amount of heterogeneity exists among different states in terms of economic development, infrastructure, skill, knowledge and subnational policies. The analysis of the two selected states, namely Uttar Pradesh and Tamil Nadu, indicates that their differential performance in manufacturing exports can be related to their contrasting heterogeneity in terms of above spatial factors. Findings also suggest that firms’ exporting in these two states are shaped by a number of firm-level parameters such as firm age, firm size, research and development (R&D) intensity, foreign ownership, domestic business group affiliation and the policy variable capturing fiscal incentives.
Learn More:
Full citation: Pradhan, Jaya Prakash and M. Zohair (2016), ‘Subnational Export Performance and Determinants: Evidence from Two Indian States’, Review of Market Integration, 7(2), pp. 133–174, 2016, Publisher: SAGE Publications.
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