The Bangalore Boom And The Detroit Doom

Shikha Dalmia writes about the rise and fall of Detroit and indicates some areas where Detroit can learn a thing or two from Bangalore. It is a lengthy article, but definitely worth a read:

Giant multinationals such as Microsoft, Intel, and Dell are cramming the city with glittering new glass-and-steel buildings. Every inch of real estate in the city proper has been spoken for, pushing Indian computer behemoths such as Infosys and Wipro to erect their sprawling, lush, and unabashedly opulent campuses on the outskirts. Hotels ranging from the sumptuously luxurious five-star Leela Palace to the low-budget Woodlands run at full capacity. Trendy little boutiques and high-rise malls selling everything from ethnic wares to Western goods are everywhere. New restaurants featuring Italian and Thai food are challenging the culinary domination of traditional Indian restaurants.

Bangalore has also made an important mistake. By favoring the I.T. industry with measures that range from preferential tax treatment to outright land grabs it has created a town too dependent on a single industry. In that respect, it could learn a sobering lesson from Detroit’s sad decline.

Although the over dependence on a particular sector can amount to trouble during a recession, the cluster phenomenon is still popular as it has its own benefits. How else can we explain the creation of sectoral hubs in various parts of the country?