Economics and the mid-life crisis have much in common: Both dwell on foregone opportunities

C'est la vie; c'est la guerre; c'est la pomme de terre . . . . . . . . . . . . . email: jpalmer at uwo dot ca

. . . . . . . . . . .Richard Posner should be awarded the next Nobel Prize in Economics . . . . . . . . . . . .

Friday, February 04, 2005

Capital-Labour Substitution and Outsourcing - Again

Ben Muse cites several sources that argue, very persuasively, that if many developing countries would relinquish their gubmnt control of the telcoms, they'd be prime candidates for supplying call centre services:
Part of the Times story: "...Kenya's regular phone lines are so abysmal that the founders of KenCall had to go through the cumbersome process of getting government approval to use a costly satellite hookup. Even more dollars were burned on an elaborate generator system aimed at keeping KenCall's computer screens running during Nairobi's frequent power failures..."

Some of Lapite's commentary: "...Outsourcing has the potential to prove as great a boon to French and (particularly) English-speaking Africa as it has for India, if only the national carriers could be shoved out of the way. Unfortunately, the incentives in most sub-Saharan African countries are such that this is unlikely to happen in the near future without significant external pressure: why privatize a parastatal which is both a handy tool for ethnic patronage and a cash cow? If the likes of Gordon Brown and Jeffrey Sachs really wish to make a difference in Africa, I'd suggest they hold off on the calls for debt forgiveneness and start by cajoling the continent's rulers to open up their telecoms and electricity sectors to local and foreign competition."

These gubmnt monopolies have likely done a great deal to inhibit economic growth. But with cell phones, satellite communications, and other innovations, I wonder how long it will take for the gubmnt monopolies to be eroded. If not long, then as I argued earlier, there's no reason why people in Bangladesh (or Ghana or whereever) could not handle McDonald's, Tim Horton's, or Jack-in-the-Box drive-through orders.
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