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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.
thanks

Topics: economics society
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    Dec 4 2012: Muralikrishna, I'm still seeing problems with your idea, although I'm sorry to be a downer. One is the problem of taxation discussed below.

    Here is another problem: what would you do if workers in the city became psychologically depressed and unable to work, or disabled from a car accident, or a similar situation? Are they to return to India? Who will pay?

    Also, you must consider that there is some resentment of outsourcing in America, and the people in your city might be very disliked here. This would be psychologically hard.

    Also, you must consider the cost of transportation of goods into your city. For example, it is conceivable that clothes could come from India for these people, but transporting them into your city would add large costs to them, costs that people who buy them in India will not have to pay. It is conceivable tht people in your city could make their own clothing, but then they will not get what they call economy of scale. Economy of scale means that things are cheaper when you make them in large quantities, for example a clothing company makes thousands of shirts, or thousands of pants, and because they make so many, they are cheaper.

    To my mind, your idea would take a great deal of effort to implement, and the rewards would not justify the effort.
    • Dec 8 2012: one essential requirement is - people who work in the CIC should be citizens of the country where it is located. Americans in this example . Goods including clothing will come from international markets be it Mexico,China,India or America.

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