Okay a quick Q & A session,
Well, New York, Chicago or Los Angeles are not the answers to any of these questions.
Enterprise and innovation in America are geographically diffuse. You can find the global leader in orthopaedic manufacture (replacement limbs) in an otherwise obscure Michigan town. One of the world’s largest banks can be found in Omaha, in the American heartland, far away from any of the big cities. There are a few reasons I can identify personally, the most prominent being that enterprise is embedded in American culture, quite like it is in the culture of Gujarat, the difference being that in America, innovation and technology drives enterprise, not just a ‘knack’ for business. The other important is the amazing uniformity of this nation when it comes to technology and services. I have been to some very small cities in Colorado and Texas but the infrastructure is no different, there are always good roads, power is not an issue and this whole country is wired to the world. Finally, the people who set up this country were very smart with its setup, important governmental and educational institutions that encourage the growth of business around them are scattered across different cities.
Contrast this with the centralization that marks India today. Mumbai is the country’s financial capital, and also the administrative capital and the seat of judiciary of a state larger than most countries ! Dont forget Bollywood. That it is India’s New York, Houston and Los Angeles put together is something that Mumbaikars can be proud of, but not the rest of India. Wouldnt it be wise to start moving some institutions to Maharashtra’s hinterland ?
But more broadly, can we see the rise of innovation and enterprise in interior India ? The man and womanpower is certainly there in abundance. There is a diffusion of educational institutes and some services into the hinterland. Certainly India’s interior is more connected to the ‘first India’ through migration, media and movies today than ever before. And India actually does pretty well when it comes to the spread of credit and banking institutions. Indeed, the British foreign secretary thinks small Indian cities are ‘ripe’ for investment. But that is mostly looking at them as a market, not as centres of entreprenuership.
There are two tracks of economic growth that I can see in the cities of interior India. One is the growth of large-scale manufacturing to service the sizeable middle-class of the larger urban centres and towns. The other is through the higher level skills of young graduates of India’s new NITs and Central Universities, which have been wisely set up in small towns/cities. Although the quality of education in these institutes is a matter of debate, what drives innovation in young graduates is mostly the ability of finding like-minded motivated people (which universities provide), intellectual freedom (which is a problem in most Indian education), and a good exposure to research (which is also question mark). Some cities show a strong correlation between educational institutes and economic growth, examples are Pune, Chennai and Hyderabad. But whether this can be extended more broadly is not clear right now.
Certainly such a development is possible, but I havent seen much evidence of anything like this happening. In recent years we have seen interior India assert itself politically and to some extent culturally, but it remains to be seen that can be translated into economic assertion.