Blog
Unit 4 Macro: Focus on India - World’s Cheapest Computer
26th January 2012
A few weeks ago came the announcement that an Indian business is finally set to launch the World’s cheapest tablet computer. This laptop device will sell for around 18 times less than the price of an iPad in London! How can a laptop be manufactured for less than $US 40?
The low price is a combination of several factors
• Basic production specification – e.g. there is no hard drive
• Low wage manufacturing in India
• The use of open-source software including the Linux operating system
• Internal Economies of Scale – the aim is to provide for 100 million Indian schoolchildren
• External Economies of Scale – not the partnerships mentioned above with higher education
• The falling cost of semi-conductor chips, motherboards and other components
• Government subsidy of about 50% of the price (consider a subsidy diagram here!)
India has hit the news with other examples of low-cost technologies including the famous £1,450 Tata Nano car and a mobile phone costing less than £11.
Consider how this breakthrough in manufacturing technology and innovation might help to stimulate economic development in India. How might similar provision of cheap mobiles and mobile network connectivity contribute to Indian growth?
Geoff Riley
Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.