Precedence of institutions over research environment in determining growth in Uttar Pradesh in India

Presented at the GLOBELICS 6th International Conference 2008 22-24 September, Mexico City, Mexico.Uttar Pradesh, in terms of per capita income the second poorest state in India in the year 2004-05. The state however has a conducive research environment for development of drugs and pharmaceuticals industry with many central government organizations carrying out research related to the industry. Drugs and pharmaceuticals is a research intensive industry. In a globalized world, presence of a conducive research environment adds to research capability of firms and their competitiveness. Availability of physical and social infrastructure is fairly adequate in the state. Thus we argue that the state of Uttar Pradesh should be in a position to attract investment into the drugs and pharmaceuticals industry. However, it is observed that there is no growth and development of drugs and pharmaceuticals industry in the state. Chemical industry of which drugs and pharmaceuticals are a part is indeed the largest industry in the state. However, there has been deindustrialization in the state in general and in chemical and chemical products industry in particular. Economic institutions ensuring property rights and legislation of laws that are helpful towards development of an industry are all there. Overall law and order is also not bad in the Lucknow-Kanpur region of the state with a conducive research environment for growth of the drugs and pharmaceuticals industry. We argue here that favourable political institutions need to precede or at least simultaneously come about with a conducive research environment for development of an industry. The political institution that exists in Uttar Pradesh presently or that existed in the past has been dominated by interest groups of caste. This puts hindrance to development of an industry in the state even if all other factors are favourable towards it