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Idea: "Country-in-a-country" special economic zone

The reason for outsourcing is usually cheaper labour costs.But the people who are doing this work are actually having a good quality of life. Because in real terms even though their wages are lower ( eg: in Bengaluru, India) compared to a developed country ( eg:USA), the cost of living is lower as well. At same time jobs are lost in USA. If americans unemployed due to outsourcing can go and work in India they have beter quality of life. But this is always not possible ,due to family commitments , distance etc.

My proposal is special economic zone similar to Charter city , but in reverse. This will be in a developed county ( Say USA). To start with set aside a few thousand hectares of land in say florida for this economic zone - call it CIC ( country in country). It will be a replica of eg: Bengaluru. It will have offices, houses,schools, health care , shopping , entertainment , banks etc. The crucial issue it will have indian rupee as currency. With all these similar to the Indian city , the cost of living and working should be on par with Bengaluru. Now companies can establish call centres in these CIC zones. The pay for call centre operatives will be same as in Bengaluru and paid in indian rupees. So from the company's point of view this call centre on american land costs the same as if it were to be in India.

But the people employed here will be americans who chose to move to this mini India in USA. They have jobs, relatively good earnings as cost of living is less with all amenities. Most people would stay and work in this CIC zone say for one or two years and then move on to jobs in america.
It is bringing american jobs to america while maintaining standard of living and cutting through the barriers of currency exchange rate etc.

It appears to be a win win situation.

But I have a feeling that there must be a fundamental flaw in this idea. I hope somebody who knows these things will be able to point it out.

Topics: economics society

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    Nov 11 2012: Well, they would be paid in rupees, but wouldn't they have to buy most of their goods and services in America at American prices? For example, the food that came into the city would be grown on surrounding American farms outside the special city, and the American farmers would place the same price on it as they expect to receive from all the rest of the Americans. Even if the special city had its own farms, they would still have to buy farm machinery and seeds from the rest of America at prevailing American prices. Thus the rupee wouldn't stretch as far here.
    Do you have any other ideas of how to create more jobs? How is the employment in India? If it is better, do you know why?
    I have the idea more employment would be created if more people bought organic food. I'm thinking it takes more care and manpower to grow organic food, although I'm not sure. If it takes more people to grow it, that means more employment.
    • Nov 11 2012: May be this special area would grow its own food later on.

      For the first few years at least, grocery items and energy ( petrol / natural gas etc) would be bought in international market at prevailing prices. This would be same for any other county - USA /India / Mexico. The same applies to machinery - all in international market - probably some made in China. For example consumer durables cost the same or nearly same in most countries. This should not put the special city at any disadvantage compared to rest of USA.

      As per services, most will be available with in the economic zone and will be paid for in rupees. These including health care, should be cheaper in the special city as by their nature the service industry is labour intensive.As the cost of living of these service providers will be cheaper , in turn their services will be less costly than mainland USA. Does it make sense?
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        Nov 13 2012: Mmm, this is getting big, if they are a city and also an agricultural area. Land is rather expensive, how would they pay for it, wouldn't they have to pay American prices? Then they will pay their property taxes in American prices.

        But you know, it's a good question. I think my friend and I discussed this once, why the dollar buys more in other countries. I think we concluded it's because many people in other countries are willing to live in very poor conditions, to not get very good wages and thus not be able to live very well. Would you agree? This is in contrast to America, where most Americans expect a high quality of life. I'm thinking the Indians in the Indian city in America would observe the high standard of living of Americans, and not be willing to live poorly.
        • Dec 2 2012: real estate / land/ property price is an issue. This is all artificial any way - like game of Monopoly. though i do not propose capping / contolling land price in any way - some mechanism is to be found to over come this.
          Air is free (till now!).
          a person employed in this CIC will have a better quality of life / higher standard of living than an unemployed person in nearby America

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