APAC governments lower entry barrier for IT multinationals

13.07.2011
Asia Pacific governments are lowering their entry barriers to attract and retain IT multinational corporations (MNCs), according to a newly released report by IDC Government Insights.

The report indicates that this move aims to incubate local businesses and to create high-value jobs by developing a services-based economy.

However, these efforts have also created a monopoly and are distorting the market's natural forces of supply and demand.

"In a bid to protect their domestic industries, some governments have turned to protectionism. Opposite to their policy objectives, standards of living decrease as a direct consequence since the move will inevitably lead the way to subpar quality of products and services at higher prices," said Bash Badawi, director of IDC Government Insights Asia Pacific. "Protectionism also stifles the growth of the IT sector. Governments should instead focus their energies on technology and knowledge transfer."

The report also shows how governments can leverage expenditure in the public sector to accelerate the process in reaching market maturity levels that facilitate the creation of a sustainable local software market.