Tyler Cowen reports from Bangalore

The good economist’s assessment of the capital of offshore outsourcing: Apparently production costs are rising out of control in a city that accounts for a third of India’s software exports. The major culprit is congestion; a seven-kilometer commute can now take ninety minutes. Population has grown by a third since 1995, and the new metro ...

By , a professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University and co-host of the Space the Nation podcast.

The good economist's assessment of the capital of offshore outsourcing:

The good economist’s assessment of the capital of offshore outsourcing:

Apparently production costs are rising out of control in a city that accounts for a third of India’s software exports. The major culprit is congestion; a seven-kilometer commute can now take ninety minutes. Population has grown by a third since 1995, and the new metro and airport are badly behind schedule. Bombay has had similar problems. The remedy? Madras (Chennai) is rising in popularity as is Calcutta, despite its propensity to elect communist governments. The bottom line: Indian infrastructure is chaos. This economy has only a limited ability to absord outsourcing ventures.

Megan McArdle has further thoughts on this. Key line: “Trendline extrapolation is a silly business in almost any economic situation, but never more so than where trade is concerned.”

Daniel W. Drezner is a professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University and co-host of the Space the Nation podcast. Twitter: @dandrezner

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