Let's now consider some of the economics
behind the national and global success of Bollywood,
and Indian film making more generally.
Bollywood movies are not just popular in India,
but they've also been a big export success,
most of all to many other parts of Asia
and also to the Middle East.
And keep in mind that although Bollywood
is a kind of dominant cluster within India,
there are plenty of Indian movies not made in Hindi,
for instance, in Bengali or Tamil.
One striking feature of cinema is that it shows a lot of geographic clustering.
For instance, in the United States,
the center for cinema is Hollywood.
It's not that most Americans movies are
in fact, hardly any of them are.
But you can think of Hollywood as a center
for talent evaluation, project evaluation, and the finance of cinema.
You can think of Hollywood, and also Bollywood,
as being similar to banking centers.
Just like there are major banking centers in New York, London, and Hong Kong,
it seems that for cinema, and the finance of cinematic projects,
that tends to show a fair amount of geographic centralization as well.
Why is this?
Well, it could just be that a lot of the major talent
needs to be together in the same city
to have a lot of important face-to-face meetings.
So why is it that India, and Mumbai in particular,
have become centers for making and distributing movies?
One key reason is simply that India has a large home market
for cinematic viewing.
Obviously there are large numbers of Indians,
and for many, many years now,
India has been the biggest film cluster
as measured by number of films made each year.
It puts out many more films than, say, Hollywood does.
Now, we know from the theory of international trade
that countries which have large home markets
are much more likely to be successes in exporting.
A large home market is suporting a large domestic industry,
which means making a lot of different films
and experimenting with different styles.
And the higher number of domestic customers
when the home market is large
means a lower per-customer cost when making films.
For more on these topics,
see some of our videos in the international trade section
and on increasing returns,
and also the video on the work of Paul Krugman.
One reason why the domestic market for movies in India has been so strong
is simply the slower spread of TV in India.
When people do not have televisions at home,
they are much more likely to want to go out and see movies.
Televisions in India are now much more common
than they were, say, two decades ago,
but there's still an effect here of path dependence.
That is, TV was initially somewhat slow to spread in India.
That led Indians to invest in a cinematic tradition,
and then there has been this active cluster
for producing and evaluating cinematic projects
in Mumbai, among other parts of India,
and that cluster has built upon itself and remained vital.
Two other reasons why India has such a vital movie-making tradition:
One has to do with natural advantages in music and dance,
and of course, a lot of Indian movies have a great deal of music and dance.
The second feature is democratic government,
which has been present in India for a long time.
There
but it tends to have to do with social mores rather than politics.
If you compare, say, India to China,
China had many decades of quite strict Communist rule
which really held their film industry in check for a long period of time.
Right now, China is trying to catch up to India in movie-making.
We'll see how that goes.
Hollywood movies are now much more popular in India
than they used to be,
but it's still worth asking:
Why is there relatively little
Hollywood penetration of the Indian market?
In a lot of countries, including parts of Western Europe
plus, say, Australia and New Zeland,
Hollywood movies really dominate the market.
But that's never been the case in India.
One factor is simply music.
That is, Bollywood movies are renowned
for the quite frequent use of music and songs.
Along these dimensions, Hollywood movies simply can't compete.
And of course, Hollywood movies
are unlikely to put a lot of Indian music into the movies
because that might hurt their performance in other markets,
including the domestic U.S. market.
It's worth nothing that to a lot of American listeners,
Indian music sounds somewhat strange or unfamiliar.
Consistent with this observation about music,
Indian movies have had a lot of their export success
in parts of the Middle East,
where the native forms of music are in some ways microtonal,
making them, in broad terms, somewhat similar to Indian music.
Another reason why the Hollywood markets and Bollywood markets for movies
are somewhat distinct
has to do with the more conservative mores
found in Bollywood movies.
Hollywood movies are much more likely
to have some kind of sex portrayed on the screen,
whether implicitly or perhaps even explicitly.
And in terms of what kinds of family conflicts you see,
or whether divorce is something which happens frequently,
or just the general cultural context and setting,
we find that on average, Indian movies and Bollywood cinema
is simply much more conservative
and that gives it a greater chance of export success
in some of the other more culturally conservative markets.
These are fascinating topics and they're also a lot of fun.
In terms of formal research,
they're actually still somewhat unexplored.
You could look at this one article found online.
There's my book called "Creative Distruction"
which has a whole chapter on the economics of cinema
but also considers Bollywood.
This is another good online piece,
and in general just Google either "Bollywood" or "economics of Bollywood"
to get to the latest writings on these topics.