US military bases – the economic impact
Intel Dump has a post about US basing strategy which, as part of its argument repeats a claim that the US base in Manas, Kyrgyzstan, contributes so heavily to the local economy that it is worth around 5% of Kyrgyzstan’s GDP – a number that seems suspiciously high to me.
The original article – US Bases Overseas Show New Strategy by Michael Mainville – explains the US base’s impact as follows:
In poverty-stricken Kyrgyzstan, the presence of even a relatively small number of American troops can have an enormous impact. The base employs more than 500 locals, paying them up to 10 times the average monthly wage of about $100. The base is pumping about $156,000 a day into the local economy and last year accounted for 5 percent of Kyrgyzstan’s entire gross domestic product.
"The general attitude among people here is that they’ll take it for what it’s worth" the Western official said. "The advent of the American base has actually helped to create something of a middle class in Bishkek."
Now, of course, if the base really is worth 5% to the Kyrgyz economy – or even a figure even remotely approaching that – you can see why the government and the people living in the region of the base would be extremely keen to ensure that the base remains. $156,000 multiplied by 365 does indeed come to a figure that roughly matches 5% of the Kyrgyz GDP but, looking at the figures that Mainville has given, I can’t help but wonder how he comes up with the figure of $156,000 per day in the first place.
My first question is how much does the US really pay local contractors – I don’t know anything about how the US military deals with these kinds of issues, but I do find it hard to imagine that they pay 10 times the local wage.
Anyway, assuming that the US pays an average of $1,000 per month to the 500 local contractors Mainville mentions (and, as he notes that would be a ten times the average wage in the region) the US would pump $500,000 a month into the local economy – or $16,438 per day. That’s less that one tenth of the total figure Mainville gives.
If – and this is far more likely, I think, but I’m happy to be corrected – the US pays wages at closer to the local market rate ($100 per month), that figure drops to $1,644 per day.
So, what gives? Depending on the figures above we can account for either $16,438 per day being pumped into the economy, or $1,644 per day, but certainly not $156,000 per day. At most, I can account for a little over 10% of the figure Mainville is claiming. Where does the rest of the money come from? Anybody have any better ideas than me?