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By Björn Wellenius, Arnold Miller, Carl J. Dahlman, World Bank

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Extra resources for Developing the electronics industry

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Firms of Different Sizes Play Complementary Roles The market features a wide range of enterprise sizes. For example, in the computer industry, large firms long in the business dominate established markets through economies of scale and scope, while small start-up firms pioneer new products and markets (Flamm). Semiconductors are produced both by large, integrated firms covering broad markets and by firms competing in small, highly advanced, specialized niches (Dahmen). In 1991 there were about 25,000 electronics manufacturing firms in the United States, of which 95 percent were relatively small firms with assets of less than $10 million, and about 40,000 software firms that had an average of only 10 employees per firm (Thomson).

Lamberton, Communication Economics and Development, Pergamon, 1982; and M. Jussawalla, D. M. Lamberton and N. D.

As in Brazil, the Indian electronics industry is fairly large, but generally not competitive by international standards. Process technologies are outmoded by up to 20 years, and prices of major electronics products are up to several times those in world markets. The industry suffers from excessive fragmentation, lack of competition and other incentives to improve performance, and unreliable and technologically weak industrial and service infrastructures. Government policy and regulation has also been a problem, especially with respect to restrictions on enterprise entry, location, and growth; high levels of indirect taxation; restrictions on foreign trade and investment; and reserve of large industry segments (especially telecommunications and defense) for the public sector.

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