Hard to Avoid Boosting Outsourcing

File:Emblem of India

USAID seems to have a program in India that will “teach workers there advanced IT skills like Enterprise Java (Java EE) programming, as well as skills in business process outsourcing and call center support. USAID will also help the trainees brush up on their English language proficiency.”

An outraged David Sirota says:

Now look, I’m all for a robust foreign aid budget – we don’t do nearly enough to help the developing world. However, using foreign aid money to specifically help private corporations “take advantage of low labor costs” in the developing world – that’s not “aid,” that’s rank taxpayer subsidization of for-profit exploitation.

I think it’s hard to say. The fact of the matter is that one very reasonable thing to do if you’re Indian and can do some computer programming and speak English is get into business process outsourcing. It’s also the case that if you’re a company with some business processes that can be profitably outsourced to an Indian firm, you’re likely to do it. Suppose that instead of this program, we spent the money on building schools. Well, what if those schools taught math and English, skills that graduates could later put to use doing some business process outsourcing? Or what if we vaccinate some kids, and they grow up to learn English and computer programming and then they get into business process outsourcing?

I don’t want to defend this specific program in specific detail, but the point is that any efforts we make to improve public health, infrastructure, or education in a poor foreign country is extremely likely to lead to an increase in the number of for-profit firms taking advantage of new opportunities to source work to low-wage locales. Personally, I’m fine with that. I believe borders should be open to the flow of goods, services, and people and look forward to continued increases in India’s level of prosperity. But I think there’s a problem here for trade-skeptics. Unless we close our borders to trade, anything we do to help poor countries improve their productive capabilities will lead to more trade and more outsourcing. So are all effective aid programs, in effect, “rank taxpayer subsidization of for-profit exploitation”?