Management, Economic, Ethic, and Postal Information

Introduction Postal industries were one of the best working place before the emergence of mobile and internet services.  Based on its ...


Postal industries were one of the best working place before the emergence of mobile and internet services.  Based on its ownership, business players in postal industries are divided between the state owned postal operator and the private owned postal operator. State Owned Postal Operators (SOPO) in many countries are the state second biggest employer in their respective country which also could be concluded that its human resources investment is high. Due to that facts and inability to improve, there are many SOPO which already in a bankruptcy or in a brink of bankruptcy because the revenue gained simply could not cover the big human resources investment. In a changing business landscape, improvement in the business service are one of the keys success on retaining customer and market leadership with no exception in the postal industries. Business improvement could be started with reshaping the marketing framework since customer buying behavior are much different than they ever did before.Marketing framework generally follow the process of analyzing, forecasting, and bridging the needs/wants of customers with the goal of generating profit. The traditional framework of 4P are first introduced by Mc Carthy consisted of Product, Price, Place, and Promotion which focused in the producer-oriented model. In 2013, an article titled Rethinking the 4P’s, analyze the need to reevaluate the framework are published in Harvard Business Review. It gave insight though the 4P’s have been serving consumer markets for no less than half a century, in the world of enterprise marketing, this approach “yields limited, product-focused strategies that are more and more at odds with the imperative to deliver solutions.”

Save Marketing Mix

One of the marketing evolutions much better suited in serving today’s customer is known as the SAVE framework. It encourage business owners and marketers to focus on marketing concern surrounding more present-day considerations, such as Solution, Access, Value and Education. This new combination is more customer-centric and helping to attract and persuade customers while producing valuable and sharable content in alignment with today’s customer journey. If we compare, the 4P’s place more priority on product aspects and specifications than it does on unique differentiators and the value it delivers. Customer naturally want to understand the benefits before being informed about specific features. Unfortunately, the 4P’s product-focused perspectives bring down the ability for customer to connect with the brand in a way that they can become aware of the greater value it proposed. SAVE framework in brief could be explained in below list:1. SOLUTION – over Product: Many businesses are moving toward solution-oriented models as opposed to pure product- or service-based. Sometimes innovation in businesses get caught up in the features and functions of a product or service and how it will lead the market. On the contrary, what customers care more about is having their problems solved. Ultimately, the product or service is meaningless unless positioned around the needs and wants of customers while communicating benefits over features.2. ACCESS – over Place: Innovation in ICT made geographic location is no longer a dominant factor when it comes to purchasing product or service. The Internet has long since taken over and broken down most of the physical barriers. Today game in the business is actually making product or service accessible. This because any customer should have the ability to review and purchase anytime, anywhere, and on any given device which strengthen the website importance as the epicenter of digital communications should have a responsive design and mobile-friendly.3. VALUE – over Price: The impact of customer’s perception of value is far more significant than the actual price of the product or service when it comes to decision making process. With more available access to information, and with a broader selection from which to choose, the concept of value plays critical role for consumers. Businesses should know what benefits customers will truly value the most will help identify the right positioning of value in the form of benefits in accordance to cost. In contrast to cost-plus pricing, value-based pricing works best when building a strong brand, or the product has highly valuable features, or is a service indistinguishable from competitors.4. EDUCATION – over Promotion: The traditional promotion usually used as a mean to buying the way in bringing the awareness of customer. What should be noted are the facts that today customers can tune in and out what they want or when they want? Creating an educational content will not only position the product or service as an expert and thought-leader in the industry, it will also creating trust as the customer will gain a feeling of dependability and familiarity from it which in turn create customer loyalty. There is a common proverb to drive the point of education over promotion home, “people love to buy, but they don’t like to be sold.”

Simple SAVE Key Implementation in Point of Sales

The strength of post office in many countries simply lie in the availability of many point of sales. But are the point of sales nowadays already implement the SAVE framework? Especially when point of sales is still the first thing the customer see in doing their purchases. With the declining revenue compared to the golden age of postal service human resources investment slowly being reduced in order to keep the business going on. In fact it turn some postal office in order to keep it business hour increase applying the shift work hour method on its point of sales. There are some cases which customer are really concerned about the long queuing time they have to spent while seeing some of the vestibule staff empty which actually caused by the shift procedures. In some worst case scenario, many customer are unwilling to come by anymore to do a purchase. Furthermore in delivering the transaction process we usually seen the increasing time of service needed because customer asking some product information which in turn reduced the employee efficiency in doing transaction. All in all an improper point of sales are driving the efficiency of the business going down or even make them walkout. In order to bring the business to a proper condition a SAVE framework could be applied to make it more suitable for bridging the customer needs/wants. One of improvement on point of sales are executed by creating informative dashboard which consist of several services which usually needed by the customer such as product price information, shipping time and opening time. The informative dashboard seemed relatively simple to do except for the fact that it really reduces the time needed for the customer to think about choosing the product by half than usual. It also educate the customer about the services available on the post office and the shift work time on the counter that reduced the customer anxiety when the services are on peak hour and some service slots are empty. Not to forget the use of local language and dialect are used in order to bring more closeness and friendlier atmosphere to the local customersTo increase value in customer perspective, a classic store atmosphere are used in maintaining the feel of classic which is hard to imitable, thus work as differentiation between private owned postal operator which is usually young in terms of its creation time compared to SOPO. Realize or not, classic atmosphere are increasing the customer feel of safety when using the postal service. Furthermore in some target customer between 40 – 60 years old it induce nostalgic feeling which made them feel more comfortable. As for the younger customer it made them to feel the uniqueness and sometimes use it as a photography sites which really useful on promoting the business to their network. Result of the improvement show that after being improved, customer somehow feel that the value they had by visiting the post-office are increased. Finally another key aspect is educate the customer by showing the availability of mobile application for doing their transaction online.


All in all. SAVE framework will allow business to better grasp and more effectively face the marketing goals in the modern world: analyzing, forecasting, and bridging the needs and wants of today’s informed consumers. Using the SAVE method as a framework in developing brand architecture and go-to-market strategy will seat a more customer-centric foundation. It paves the way for executing a modern marketing plan comprising of creating high-value interactions and prosperous relationships by using local tastes on point of sales where customer interact with the business directly. Lastly, do not forget to keep the KISS (keep it simple stupid) rule when doing an improvement so you could do it anywhere and anytime.

Cost and Benefit Approach in Ethics: A Utilitarian View By: Haidir Aulia Reizaputra Cost and benefit generally based on utilitarian ...

Cost and Benefit Approach in Ethics: A Utilitarian View

By: Haidir Aulia Reizaputra

Cost and benefit generally based on utilitarian view on the reasoning of choosing something based on the greater good it give. Utilitarianism essentially are form of moral pri
nciple which approve of chosing  the greatest balance of benefits over harm for everyone affected as long as it gives maximum benefit over harms for any affected individuals. Unconsciously we often use this type of moral reasoning to point the good will come from the cation we do or the harm will be prevented. Basically the cost and benefit approach are refined from the mill principle, a utilitarian figure which describe benefit and harms in the satisfaction of personal preferences in economic terms of monetary benefits or monetary cost. But before mill there is Bentham in the process of applying the utilitarian view in business.

Bentham rejected Christianity and was influenced by David Hume (1711-76) and the French philosopher Helvitius, who argued that true justice was synonymous with the good of whole. He formulated the greatest happiness principle: "By the principle of utility is meant that principle which approves or disapproves of every action whatsoever, according to the tendency which it appears to have to augment or diminish the happiness of the party whose interest is in question."  So we can conclude that utilitarianism in business is primarily concerned with outcomes rather than processes which further linked the utilitarian view of cost and benefit analysis. Unfortunately sometimes the cost and benefit analysis aren't appropriate tools when the outcomes affect a large number of parties with different needs. The problems risen up are mostly the concern of unequal distribution of costs and benefits. There can be broad social cost for example promoting the unhealthy smoking habits to Indonesia citizen  are resulting in a higher expenditure for health care whereas the benefit of cigarettes producer enjoyed by the employee and the higher expenditure for health care are enjoyed by the medical institution, the doctor, or even the medical companies.

Though so, the utilitarian principle are often used by applying the cost and benefit analysis as it one of decision making tool. Companies are tempted to work out by predict how much something is going to cost them before taking the action or making a decision. Which in monetary view that would mean companies are making profits while the consumer are being satisfied by the product. This will going right with the assumption that the products which the companies are making are fit for purpose, safe, and give value for money. In the past the action of this cost and benefit analysis were happen in ford pinto cases. 

Ford pinto which had a flaw in the fuel tanks position and design are based on the utilitarian view to keep the cost down so it could be sold at $2.000. It sold well until 1972 when the first accident happen and started the uprising. So what ford do?they using the cost and benefit analysis and calculated the costs of events happened in monetary value. Based on the data from the states, it give a sum of $49.5 million for the cost of social components from the estimated 180 deaths, 180 burn injuries, and 2.100 vehicle lost which could be a benefit for ford if they are redesign the flaw on pinto. But surprisingly when ford calculated the cost to make the car better, it gives a sum of $137 million summarized from the cost of 11 million vehicles at $11per tanks and $ 11 per unit for other modification.

The calculation of cost and benefit on monetary view are give the impression of what ford had decide to make the pinto as it was were right. Because the cost to make pinto right so there will be no accident outweighed the benefit it would have by $87 million. In short, if the companies were focused on the monetary view, what ford did were right. The problem is are the value of human life could be quantified as an monetary things?

 The question remain the same, actually whom will have the benefit and whom will be burdened by the cost. Basically, there could be something wrong in the evaluation process of good and bad consequences ensuring the company to deciding the action plan needed. In the end cost and benefit analysis which derived from the utilitarian view should aware of the weakness it possesses which is the lack of equal distribution of cost and benefit to its stakeholder and the individual within.   As John Stuart Mill once wrote: "the happiness which form the utilitarian standard of what is right in conduct, is not own happiness but that of all concerned'. The choice is yours.

Calculating Consequences:
The Utilitarian Approach to Ethics

Developed by Manuel Velasquez, Claire Andre, Thomas Shanks, S.J., and Michael J. Meyer
Imagine that the U.S. Central Intelligence Agency gets wind of a plot to set off a dirty bomb in a major American city. Agents capture a suspect who, they believe, has information about where the bomb is planted. Is it permissible for them to torture the suspect into revealing the bomb's whereabouts? Can the dignity of one individual be violated in order to save many others?
Greatest Balance of Goods Over Harms
If you answered yes, you were probably using a form of moral reasoning called "utilitarianism." Stripped down to its essentials, utilitarianism is a moral principle that holds that the morally right course of action in any situation is the one that produces the greatest balance of benefits over harms for everyone affected. So long as a course of action produces maximum benefits for everyone, utilitarianism does not care whether the benefits are produced by lies, manipulation, or coercion.
Many of us use this type of moral reasoning frequently in our daily decisions. When asked to explain why we feel we have a moral duty to perform some action, we often point to the good that will come from the action or the harm it will prevent. Business analysts, legislators, and scientists weigh daily the resulting benefits and harms of policies when deciding, for example, whether to invest resources in a certain public project, whether to approve a new drug, or whether to ban a certain pesticide.
Utilitarianism offers a relatively straightforward method for deciding the morally right course of action for any particular situation we may find ourselves in. To discover what we ought to do in any situation, we first identify the various courses of action that we could perform. Second, we determine all of the foreseeable benefits and harms that would result from each course of action for everyone affected by the action. And third, we choose the course of action that provides the greatest benefits after the costs have been taken into account.
The principle of utilitarianism can be traced to the writings of Jeremy Bentham, who lived in England during the eighteenth and nineteenth centuries. Bentham, a legal reformer, sought an objective basis that would provide a publicly acceptable norm for determining what kinds of laws England should enact. He believed that the most promising way of reaching such an agreement was to choose that policy that would bring about the greatest net benefits to society once the harms had been taken into account. His motto, a familiar one now, was "the greatest good for the greatest number."
Over the years, the principle of utilitarianism has been expanded and refined so that today there are many variations of the principle. For example, Bentham defined benefits and harms in terms of pleasure and pain. John Stuart Mill, a great 19th century utilitarian figure, spoke of benefits and harms not in terms of pleasure and pain alone but in terms of the quality or intensity of such pleasure and pain. Today utilitarians often describe benefits and harms in terms of the satisfaction of personal preferences or in purely economic terms of monetary benefits over monetary costs.
Utilitarians also differ in their views about the kind of question we ought to ask ourselves when making an ethical decision. Some utilitarians maintain that in making an ethical decision, we must ask ourselves: "What effect will my doing this act in this situation have on the general balance of good over evil?" If lying would produce the best consequences in a particular situation, we ought to lie. Others, known as rule utilitarians, claim that we must choose that act that conforms to the general rule that would have the best consequences. In other words, we must ask ourselves: "What effect would everyone's doing this kind of action have on the general balance of good over evil?" So, for example, the rule "to always tell the truth" in general promotes the good of everyone and therefore should always be followed, even if in a certain situation lying would produce the best consequences. Despite such differences among utilitarians, however, most hold to the general principle that morality must depend on balancing the beneficial and harmful consequences of our conduct.
Problems With Utilitarianism
While utilitarianism is currently a very popular ethical theory, there are some difficulties in relying on it as a sole method for moral decision-making. First, the utilitarian calculation requires that we assign values to the benefits and harms resulting from our actions and compare them with the benefits and harms that might result from other actions. But it's often difficult, if not impossible, to measure and compare the values of certain benefits and costs. How do we go about assigning a value to life or to art? And how do we go about comparing the value of money with, for example, the value of life, the value of time, or the value of human dignity? Moreover, can we ever be really certain about all of the consequences of our actions? Our ability to measure and to predict the benefits and harms resulting from a course of action or a moral rule is dubious, to say the least.
Perhaps the greatest difficulty with utilitarianism is that it fails to take into account considerations of justice. We can imagine instances where a certain course of action would produce great benefits for society, but they would be clearly unjust. During the apartheid regime in South Africa in the last century, South African whites, for example, sometimes claimed that all South Africans—including blacks—were better off under white rule. These whites claimed that in those African nations that have traded a whites-only government for a black or mixed one, social conditions have rapidly deteriorated. Civil wars, economic decline, famine, and unrest, they predicted, will be the result of allowing the black majority of South Africa to run the government. If such a prediction were true—and the end of apartheid has shown that the prediction was false—then the white government of South Africa would have been morally justified by utilitarianism, in spite of its injustice.
If our moral decisions are to take into account considerations of justice, then apparently utilitarianism cannot be the sole principle guiding our decisions. It can, however, play a role in these decisions. The principle of utilitarianism invites us to consider the immediate and the less immediate consequences of our actions. Given its insistence on summing the benefits and harms of all people, utilitarianism asks us to look beyond self-interest to consider impartially the interests of all persons affected by our actions. As John Stuart Mill once wrote:
The happiness which forms the utilitarian standard of what is right in conduct, is not...(one's) own happiness, but that of all concerned. As between his own happiness and that of others, utilitarianism requires him to be as strictly impartial as a disinterested and benevolent spectator.
In an era today that some have characterized as "the age of self-interest," utilitarianism is a powerful reminder that morality calls us to look beyond the self to the good of all.
The views expressed do not necessarily represent the position of the Markkula Center for Applied Ethics at Santa Clara University. We welcome your comments, suggestions, or alternative points of view.
This article appeared originally in Issues in Ethics V2 N1 (Winter 1989)
Revised 8/2014
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Cambodia Economy Outlook By: Haidir Aulia English: Entrance of Siem Reap International Airport and Overseas Terminal (Photo credit:...

Cambodia Economy Outlook

By: Haidir Aulia

English: Entrance of Siem Reap International A...
English: Entrance of Siem Reap International Airport and Overseas Terminal (Photo credit: Wikipedia)

Cambodia Toward a Healthy Outlook In 2014

Latest data from the National Institute of Statistics (NIS) reveal that the economy grew 7.5 percent in 2013, up from 7.3 percent in 2012. The uptick in growth was in spite of floods in September and October, which affected agriculture, and political unrest that had threatened to spill to the garments and footwear sector. According to the revised data, industries grew by a stellar 11 percent in 2013, aided by a strong exports sector. Services growth also picked up (8.7 percent), aided by tourism (a 17.5 percent rise in arrivals), real estate services, and wholesale and retail trade. Interestingly, the NIS’s growth figure for 2013 is higher than the 7.0 percent rise estimated by the International Monetary Fund (IMF) and the Asian Development Bank. Both had expected growth to slow last year due to political uncertainty and floods.

Location map of Cambodia with Siem Reap Provin...
Location map of Cambodia with Siem Reap Province highlighted Equirectangular projection, N/S stretching 105 %. Geographic limits of the map: * N: 14.8° N * S: 9.9° N * W: 102.2° E * E: 107.9° E (Photo credit: Wikipedia)
The economy is likely to remain strong this year, growing by about 7.2–7.7 percent. Exports, primarily garments and footwear, will again be a key growth driver; recent data reveal a 20 percent year-over-year rise in exports in the first five months of 2014. The sector will also benefit from investments from China as factories relocate from the mainland due to cost advantages, and from Vietnam due to recent anti-China riots there. Tourism is likely to pick up in the second half as tourist arrivals accelerate (due to lower political tensions) from a modest 5.2 percent rise in the first half. The development of new tourist destinations and infrastructure improvements, including a $200 million upgrade of the Phnom Penh and Siem Reap airports, will help. These upgrades are one of many infrastructure investments, which, along with greater housing demand, will keep construction activity strong in the medium term.

Cambodia, like many other countries in Asia, has for many years relied on its export sector to be a key driver of growth. Low cost of labour has seen the country become a key manufacturer and exporter of garments and footwear to markets such as the US and European Union (EU). Economic problems in those markets have dented consumer confidence, and in 2012 Cambodia saw the pace of growth of its exports decline - but , according to the ADB, domestic consumption jumped by 9.5% and is expected to rise further in the coming years. And as conditions in the US and EU improve, exports are likely to rebound."European demand for Cambodian garments and footwear is expected to maintain good growth, supported by duty-free access to the EU," the bank said in a report on the Cambodian economy published in April."Shipments to the US will likely be subdued this year but should pick up after that," it added.

Another key driver of Cambodia's growth has been the surge in foreign direct investment in the country, which jumped by 75% last year to $1.5bn (£1bn). Along with traditional sectors such as garment manufacturing, foreign money has also been used to help fund new industries such as auto-parts manufacturing and agricultural products processing. Low labour costs and Cambodia's proximity to key markets such as China and other emerging economies in South East Asia are attractive to foreign investors. And with wages in countries such as Thailand and China on the rise, Cambodia is likely to become even more attractive. "This trend is only going to get stronger with more companies looking to set up operations in Asia," says Rajiv Biswas, chief economist for Asia-Pacific at IHS Global Insight. "Given its competitiveness and the current economic environment, Cambodia is going to increasingly become a destination of choice for foreign investors."

Fiscal reforms are another concern. The government has made a start by trying to widen the tax base. However, it needs to do more. It should aim for a nascent government bond market in the medium term; issuing treasury securities instead of drawing down deposits at the NBC could be a first step. It also needs to innovate to bring people and businesses into the formal economy, both to widen fiscal oversight and to diversify the economy. The government’s recent effort to enable small and medium enterprises (SMEs) to register online is encouraging. Policymakers need to develop the SME sector, given its role in job creation and economic growth. A recent economic census revealed that 97.7 percent of the nearly 500,000 enterprises surveyed were micro enterprises; the share of SMEs was a puny 2.1 percent. This needs to change. To do so, authorities also need to improve education and technology, possibly in collaboration with international partners. Currently, in the World Economic Forum’s global competitiveness indices, Cambodia ranks a poor 116 among 148 countries in higher education and training; its rank in technological readiness (97) is not impressive either.

Cambodia Biggest Challenge

Cambodia's garment industry is a small but increasingly important producer of inexpensive clothing in Asia. The US$5bn-plus industry employs 500,000 workers, accounts for around 80% of Cambodia's exports and is the country's main source of foreign currency. But frequent labour unrest, the absence of a proper wage-setting mechanism and ineffectual government management of the industry pose threats to the industry's growth prospects.The industry has been unsettled since early this year. In January the Cambodian government cracked down on workers who had been calling for a doubling of the minimum wage. The crackdown resulted in the deaths of at least four workers, while dozens were injured. As things stand, workers' demands for better pay and improved working conditions remain largely unresolved. Fortunately for the government, even though labour unrest is a frequent occurrence and a known risk in Cambodia, they have not made an irreversible difference to buyers' view of the country as an important and growing, if relatively small, sourcing option for clothes in Asia. 

This might be changing, however, if survey data from the Garment Manufacturers Association in Cambodia (GMAC), an industry lobby group, are to be believed. In GMAC's recent survey, some 50% of the body's 247 members said that they lacked the orders to fill production lines, with 160 saying that orders had fallen sharply and one in four reporting that too few orders had led them to cut production. As such, GMAC expects a sharp drop in orders during the remainder of 2014. Although it is not possible to verify the results of GMAC's survey independently, they nonetheless tally with an accepted view in the industry that orders by international brands have slumped recently. According to data from GMAC, earnings from garments and textile shipments rose a respectable 9% year on year to US$1.2bn in the first quarter (January–March). Admittedly, it will take time before the reported drop in orders translates into lower export growth and it is crucial to acknowledge that any moderation in growth is likely to be partly cyclical. Indeed, in Bangladesh, the most competitive and largest exporter of garments outside China, export growth stalled briefly in the middle of 2014. 

Cambodia's garment manufacturers face a raft of unresolved issues that are likely to weigh on growth in the short to medium term. First and foremost, there continues to be a strong demand from unions and workers for higher wages. The government already raised the monthly minimum wage in the sector quite recently from US$80 to US$100 earlier this year. At the time, GMAC had agreed to raise the minimum wage to US$160 by 2018. However, the arrangement broke down when the main opposition party, the Cambodia National Rescue Party, backed workers' demands for a more immediate rise in wages. Labour unions are now demanding a rise to US$177 per month, to be effective in 2015. In mid–September 2014, the government deployed armed troops in the capital, Phnom Penh, amid fresh demonstrations by workers for such a pay increase. So far, the protests have largely been peaceful, but the risks of yet another escalation cannot be ignored.
As is the case in other developing countries without an established wage-setting mechanism, the Cambodian government raised the minimum wage to US$100 only after crippling strikes put considerable pressure on it to act. In Bangladesh, it took the country's worst industrial disaster—the collapse of Rana Plaza, which killed more than 1,000 workers—for the government to act swiftly and push factory owners to accept a 77% rise in the monthly minimum wage to US$68. 

This lingering uncertainty over the current state of industrial relations is likely to continue to make international buyers hesitant to increase their sourcing from Cambodia in the short run. It is the strike-related production disruptions and reputational risks associated with labour-rights violations that particularly worry buyers. Crucially, Cambodia is only one of several countries in the region that manufacture such goods at relatively low costs. When low production costs come with an often unquantifiable risk to firms' reputation and supply chains, however, buyers begin to tread more carefully. The upshot is fewer orders from Cambodian factories.

For now, any slowdown in growth is likely to be largely cyclical, although the government's inability to sort out industrial disputes quickly is certainly an added burden for the sector. Any further delays in resolving the aforementioned issues only serve to set Cambodia's manufacturers back further behind their regional competitors. Aside from Bangladesh, Vietnam's garment industry next door is also growing rapidly. Although its industrial relations are volatile, too, the local industry has scale—it is nearly four times as big as Cambodia's. Furthermore, its labour productivity is higher. 

A majority of Cambodians in a 2013 corruption survey said they had paid a bribe in the past year; nearly three-quarters said that personal contacts were needed when dealing with the government. A weak and inconsistent judiciary does not protect private property effectively. Investments in mining, forestry, agriculture, textiles, tourism, hydropower, and real estate frequently involve land grabs by powerful politicians, bureaucrats, and military. The top individual income tax rate has fallen to 20 percent. The top corporate tax rate remains at 20 percent for most businesses but 30 percent for the petroleum and gas sectors. Other taxes include a value-added tax (VAT) and an excise tax. The overall tax burden has remained steady at about 10.9 percent of GDP. Expenditures remain around 20 percent of the domestic economy, and public debt has stabilized at about 29 percent of GDP.

Cambodia needs efficient and transparent mechanisms to deal with problems pertaining to land acquisitions and the environment. Focus on the latter is increasing due to the recurrence of floods in low-lying areas and fears of some infrastructure projects’ environmental impact. Policymakers need to frame a mechanism to resolve these environmental conflicts without compromising on economic development efforts. Transparent rules will also help address issues related to land acquisitions. The CNRP’s return to parliament is likely to help increase focus on some of these concerns since the party had campaigned on these issues during the national elections.

There have been protests in recent months with workers demanding an increase in their wages. And critics say for the country to take the next step in its growth cycle, it needs to diversify into high-end manufacturing on a bigger scale. But Cambodia may find it tough to do so, not least because of the skill level of the majority of its labour force. "A key restraint to growth is the skill mismatch, or the lack of adequately skilled labour in the high-end industries," says Srinivas Madhur, director of research at Cambodia Development Resource Institute. "The enrolment rate in tertiary education is only 14%, which means the pool of skilled people is very small." Mr Biswas says that the inability of Cambodia to move into advanced manufacturing is a "great vulnerability". "What is crucial now, is that they need to develop their education sector and they need to build partnerships to bring more advanced education into the country, especially vocational training," he says.

Another key area of concern is that Cambodia remains one of the poorest countries in Asia. Its per capita income in 2012 was $946, according to the World Bank. That compares with $5,474 in Thailand and $3,557 in Indonesia. The ADB has quoted the World Health Organization as saying vitamin and mineral deficiencies alone cost Cambodia's economy $146m each year. The bank says 55% of under-fives were anaemic in 2010. And malnutrition and poor health stunt the growth of up to 40% of Cambodian children. Economic growth has seen poverty levels come down - but critics say the country needs to do much more to ensure the benefits trickle down to the poor. "Inclusive growth", they say, is a much better claim to fame than "robust growth".


Since 2004, garments, construction, agriculture, and tourism have driven Cambodia's growth. GDP climbed more than 6% per year between 2010 and 2012. The garment industry currently employs more about 400,000 people and accounts for about 70% of Cambodia's total exports. In 2005, exploitable oil deposits were found beneath Cambodia's territorial waters, representing a potential revenue stream for the government, if commercial extraction becomes feasible. Mining also is attracting some investor interest and the government has touted opportunities for mining bauxite, gold, iron and gems. The tourism industry has continued to grow rapidly with foreign arrivals exceeding 2 million per year since 2007 and reaching over 3 million visitors in 2012. Cambodia, nevertheless, remains one of the poorest countries in Asia and long-term economic development remains a daunting challenge, inhibited by endemic corruption, limited educational opportunities, high income inequality, and poor job prospects. Approximately 4 million people live on less than $1.25 per day, and 37% of Cambodian children under the age of 5 suffer from chronic malnutrition. More than 50% of the population is less than 25 years old. The population lacks education and productive skills, particularly in the impoverished countryside, which also lacks basic infrastructure. The Cambodian Government is working with bilateral and multilateral donors, including the Asian Development Bank, the World Bank and IMF, to address the country's many pressing needs; more than 50% of the government budget comes from donor assistance. The major economic challenge for Cambodia over the next decade will be fashioning an economic environment in which the private sector can create enough jobs to handle Cambodia's demographic imbalance.

Going forward, there is still likely to be plenty of business for Cambodia-based garment manufacturers. China's garment exports alone are worth more than $250bn. Rising wages and increasingly stricter environmental regulations in China are seeing production migrating to lower-cost countries such as Cambodia. For illustration, if 10% of China's current garment production were to shift to Cambodia over the next decade, over US$25bn worth of export revenues would supplement the local industry's current foreign receipts. This would help Cambodia's garment industry to catch up to the likes of Bangladesh quickly. Given the relatively close political and commercial links between Cambodia and China, the former is likely to remain a natural alternative for some of this intra-regional shift in production. As such, considering these broad supportive structural factors, the pace of growth of Cambodia's garment industry will largely be determined by how effectively the government resolves the industry's problems at home.

One thing for sure, transparency in law and reforming the labor market are the biggest concern for Cambodia right now. In fact report says a high percentage of skill missmatch in the industry are steadily arise. In economic freedom Cambodia’s economic freedom score is 57.4, making its economy the 108th freest in the 2014 Index. Its overall score is 1.1 points worse than last year due to declines in monetary freedom, business freedom, labor freedom, and freedom from corruption. A high foreign direct investment should be managed well by the states to further increase the productivity of the ecnomic locomotive.


International Export-Import Process and Tips Through Sourcing Perspective Adapted from International Sourcing Course by Bigey Laurent ...

International Export-Import Process and Tips Through Sourcing Perspective

Adapted from International Sourcing Course by Bigey Laurent
By: Haidir Aulia Reizaputra

The first thing to do when doing export-import activities is that the process itself should have been discussed and get support from the related stakeholders so we could obtain all function necessary and have more accurate budget. After the importance have been discussed we should get ready to classify the product. Product classification in sourcing usually start by grouping the products according manufactured process then listed the rank of potential savings based and cost-benefits analysis. Then we could choose the highest potential saving product  from each group. Also don't forget carefully take in consideration regarding product with high potential saving but subject to frequent design change and quality problems. Here the tips is sometimes you can get holds information  from your companies and present supplier and it will make you easier to compared the actual product and specification also it will be useful for pre-analysis samples to be sent to new supplier or importer. Now the next step is select sourcing or export-import approach that will be taken either directly to supplier, local sales contact of foreign supplier, opening of international purchasing office, but now we will focused on overseas sourcing representative approach.

The reasons we focused on overseas sourcing representative approach because it will give more benefits to firms that doesn't have the required volume for make the deal directly with the supplier while the product itself command a great attention from the global sourcing market. Here, the overseas sourcing representative will frequently group several end customers to meet the volume requirement also to make the supplier more interested. Another services that usually provided by overseas sourcing representative included purchasing requirements, qualifying potential supplier, insure order entries and quality issues, facility communication and negotiation process, even at some point the overseas sourcing representative will take full responsibility. The trade-off of using overseas sourcing representative will likely about the expense will be added to direct material cost that will range around 5 - 20 % and sometimes it's difficult to remove from supplier - purchaser relationship, and generally their work according to commission. After we choose the approach the next process is target the potential supply countries according to the price, quality, capacity, technology, and strategic purposes. The list of sources can be found on trade promotion offices of target countries, department of commerce, business development section at the embassy of the country, international purchasing offices of friendly company, trade journal,  direct marketing from contractors, the internet, or the companies overseas selling offices. In the internet, one of recommended site is which provide a forum for sharing information, discussion of current trends, and facilitating the networking opportunities for their members in their global sourcing initiative. Some website even will cover sources of various hardware product and the specific market discussion each month.

The next step is how we develop inquiry packages and develop delivered price of the product. First of all we must gone through request for quotation (RFQ), standard business process to invite suppliers into bidding process  to  bid on specific products or services which involves price per-item, payment terms, quality level per item, contract length, volume, and sometimes allows different contractors to provide a quotation. The process usually take multiple rounds or even a reserve auction. Don't forget to take into consideration all referenced non-company document, cleaning and packaging, estimated annual quantity for each shipment, requested currency, and use ICC(International Chamber of Commerce) incoterms during the RFQ. ICC incoterms is important because it recognized as standard in worldwide and domestic contracts for the sale of goods. After we obtained the supplier quotations, format, and date of receipt, we must determine the freight and import cost. Here the tips is use the total package weight and sizes received from the suppliers and don't hesitate to use your subcontractor transport or custom broker to assist in determining the import duty and the other charges applicable so we could develop delivered prices based on many variables. Also always perform formal  supplier evaluation on site by the one who know the product and in best position to evaluate the supplier based on quality, capacity, administration, and development.

The next step to do is to write and place purchasing order contract. For international order always include: Shipping and routing method, packing list should be sent separately from the shipment, harmonized system code for the broker or overseas sourcing representative, and payment method. Review again the standard terms and condition, clauses related to rejection, disputes, payments, governing law, etc. For payment method, the usual thing is to issue Banker's acceptance or letters of credit which is a written commitment by a bank to make payment on behalf of an importer under accepted condition. For order administration, it will be easier to do if you know the supplier production process and schedule, so the companies could check frequently for status with data about product step completion. For shipping instruction, it would be wise to not leave it up to the supplier in order to approach punctually to the time for shipment. When the payment time is done usually companies must manage the currency rates for payment. There are generally three strategy; put all the risk on supplier, companies take all the risk, and negotiate a shared risk position between seller and buyer. The method ought to be used other than banker acceptance is to hedge in financial market through option, forward contract, or swap.

In conclusion, when handling export prior to the shipment, it's better to have checklist about: currency status, certificate of origin, request for current status,  detailed supplier transportation method, specify forwarder or broker, and sometimes we need to include an inspection certificate. Whilst after the shipment leaves the supplier, we should have check about: confirm that freight forwarder has freight and that booking was made, confirm shipment in on intended vessel flight,  confirm custom clearance with broker and determine if pre clear through customs is possible. Lastly, always check documents  received to insure correct consignee, notify party, destination, and confirm inland delivery with inland carrier. That's all good luck for your export - import process.

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International Sourcing A Global Perspective Based on the International Sourcing Course of Laurent Biggey by: Haidir Aulia Reizaputra ...

International Sourcing A Global Perspective

Based on the International Sourcing Course of Laurent Biggey
by: Haidir Aulia Reizaputra

What is International Sourcing? what is LCCS? put it simply, it is an activity of searching and obtaining, goods,services and other resource on a worldwide scale. The main problem usually about complying with the needs of complying to company requirements and to reach possibility of enhance current competitive advantages of company because global sourcing is more than physical sourcing, it also related to supplier development  and generation of global purchasing strategies. Generally there are two different sourcing method insourcing and out sourcing. Insourcing is the possibility to gather the needs of sourcing form parent, subsidiarie or sourcing in-between foreign companies, therefore it can also be done through domestic in-house sourcing or offshore subsidiary sourcing. Outsourcing in other hand is the activities of gather the company needs performed by outside supplier rather than internally because the outside supplier can make the needs more cheaper or cost effective. Many products can be sourced either internal or externally such as raw materials, semi-manufactured products, finished products, maintenance, repair and operation supply. Currently one of the global outsourcing drivers is the availability of low-cost countries (LCCS) which according to Assa Abloy is the countries where the full labor cost are below five euros per hour.

English: Economies of scale surd
English: Economies of scale surd (Photo credit: Wikipedia)
Believe or not sourcing has become an important part on the international trade because the possibility of global leveraging method such as creation of flexible order pattern for companies finished product to adapt the leadtime of global shipment, interchangeability of supply around the world to achieve economies of scale in total cost, the availability of various technologies to handle the product, and the absence or small duty tariif for international product. In the other hand, companies who are not participated in global sourcing usually have their own reason such as to reduce currency risk and high duties, easily to monitor and tend to have more flexibility, weak infrastructure and geographical limits, but the most tedious thing is the unavailability of required raw materials from another place or they already have a relatively developed local industries competitive advantages. In the middle there are companies who used regional sourcing method in proximate countries area such as European Union or ASEAN. The reason behind is because the regional leveraging opportunities, simple and more punctual cross - border shipping, the capability of supplier to do exporting administratively, relatively equal currency value between countries, and the technology or raw materials only available in regional area.

Cast aside any problem with some materials that can only obtained in regional or local sourcing, many people now also have tendency to realize the side effects of globalization in which it created immense cost pressure and not only it increase the supplier offer but also tighten the competition. Another fact is in matured market, companies product have tendency to face difficulties on revenues growth. Because of that we can denied the fact that the other way to increase shareholders value is cost reduction program by making the companies work more effective such as offering low product prices resulted from total cost reduction. To attain that condition some companies have directed their focus on low-cost country sourcing (LCCS). One of example is BMW plan to saving 6 billion euros over 5 years in 2007 which resulted on IPO creation in Budapest and  indirectly also build a network of qualified suppliers in Eastern Europe. The low level of labor cost gives secondary implication to make the companies reduced their capital intensive to manual labor intensive which give the companies more flexible option to pursued their economies of scale i.e a phone whose design done in United States, components are sourced in China, and assembled in Thailand. Not only make the cost slightly lower, the search of LCCS also give opportunities to satisfied their local markets which characterized by  rapid growth because increasing customer demand and sometimes turned the LCCS into important sales market as well.


Globalization also bring some problem to international trade in 20th century especially in sourcing on LCCS. The first wall to be taken is standardization process with wide offer and option available that will take times to simplified and adapt while keep preserving to quality standards. The second is high technology sourcing is a bit more risky regarding to the short product life cycle and intellectual property protection. Third is the common problem when sourcing services externally because the basic concept of services it self which is intangible, perishable, inseparable, and very sensitive to subjective assessment. The fourth problem is regarding to the delivery of goods itself and external risk such as currency risk, political instability, and corruption. Tough problem arise, sourcing must also entered several phase upon it's completion such as empowerment by doing pre-analysist and re-engineer the business process, Strategy planning and development, and evaluation by using key performances indicator or total quality management. On the execution of purchasing, companies could also consider various possibility such as direct purchase to supplier by importing the product, purchases by subsidiary or through distribution subsidiary in customer country, and purchase through third parties such as brokers, international purchasing offices or agents.

In conclusion, companies must be careful to step into international sourcing because international sourcing is crucial  task that needed to be planned, organized, actuated, and controlled with great care. A company could also end-up in reversed situation of increased total cost instead of reducing it because missmanagement and incapability to overcome cultural barriers, increased distances, and external risk. What we must keep in mind, sourcing aimed as initiatives to identify suppliers which can deliver maximum amount of value in the goods or services at lowest possible cost while also preserved adequate quality problems.

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Business Ethics Case Study: Heroin Justification Paradox of Triple P  (Prudence, Prevention, Precautionary) by: Haidir Aulia Reizaputr...

Business Ethics Case Study: Heroin Justification Paradox of Triple P 

(Prudence, Prevention, Precautionary)

by: Haidir Aulia Reizaputra

Illegal Drug Addiction and Substance Abuse
Illegal Drug Addiction and Substance Abuse (Photo credit:

Why we should legalize the heroin or other illegal drugs?More over what is triple P or 3P? Before we thinking about it, we must first know what is the consequences or risk and what is the probability or the fact about the problem itself. Put it simply, the triple P could also explained with the utilitarian ethics, moral virtue, and deontology approaches. Prudence principle its an act to take all the required measure to avoid to harm which is can only possible if the persons know the consequences and the probability of having the consequences. The real example is the activities of hedging in financial case which the hedger know the fact and assume a probability so they could make the best trade-off for their coverage cost. Prevention principle is more likely resemblence a duty to inform someone about some potential harm though the probability is unknown. The common use of prevention rule is like the advertisement of the danger of smoking though we don't know how much the probability we are having  the cancer or impotent. The controversial one is Precautionary principle because here we doesn't know the probability data and doesn't have the proofs or facts. Prudence Principle can be justified with the utilitarian ethics, deontology, and moral virtues because we know the facts or consequences and the probability that would act like a process or certain rules to be followed so the harm would not happen. Prevention principle could be justified with utilitarian concept and moral virtues but hardly to be justified with deontology concept because here we doesn't know the probability that will became the process to be taken. Precautionary principles could only be justified with moral virtues because here we doesn't know the risk and the probability. Moreover precautionary principle is somewhat like a religion or beliefs, though we can't see the actual things or the probability we trust and followed it.

Now, suppose there are three persons: the doctor, the soldier, and normal drug addict which are trying to use heroin. In this case the use of heroin could only be justified for the doctor according to the prudence principle because let's say he know the probability and the risk of heroin itself and though he use it he knows some limit and the probability of overdose. So the doctors will likely to play it safe and use the drugs in proper way and take the prudence principle. The soldier use of heroin could be justified by the prevention principle because here the soldiers supposed to know the consequences, for example it's justified that the soldier use of heroin as pain-killer during war is justified for the trade-off of releasing pain and emergency with the cost of the soldier will have a tendency to try the heroin again even when the war is over. But what about the use of heroin for mature drug addict? it can be justified with moral virtues. Why? because we must noted that moral virtues is simply about the moral values that ones believe. So, if the addict believes by taking the drugs he/she could go better it would be justified because he himself need it. So whats the problem with the prohibition of the heroin?

Walter Blocks simply stated that:

The evils commonly blamed on heroin addiction are in reality the fault of the prohibition of drugs and not of the addiction itself. Given the prohibition of drugs, it is the person who sells drugs illegally who does more than anyone to mitigate the evil effects of the original prohibition.

The logic behind is simply because the prohibition of heroin directly affecting the price of the heroin to move to premium prices because the outlaw risk and make mature-drug-addict more desperate because in this condition for one day they should consume the heroin that will cost about 100$ - 150$ per day while the actual cost without prohibition supposed to only cost 1/10. The problem is with this higher price staking up there will be roughly two option for the heroin addicts, seeks for medical help or secure his "fix" to enter a life of crime. The seek with medical help will have the risk of shame and long treatment program, therefore when the drug-addict want to seek the medical treatment there is a risk of being caught by the police because the use of drugs is illegal in most countries. Now, how if he think that the risk between going to medical treatment and act a crime is nearly the same but in the case of doing crime he will perceived that he is getting some? Again, supposed he entered the life of crime because he doesn't have the access of medical treatment that would mean he will need approximately 35.000$ - 50.000$ per year. Supposed he became a thieves he need to steal at least  200.000$ per year since the stealing stuff could only worth around 20% -30% of the original value. Not only now he have more risk to be caught but innocent people will dragged directly or indirectly because his crime. This mean that the helpless drug-addict became more helpless due to the prohibition of drug itself not because the addiction but more likely due to the high price of heroin because the prohibition itself. Another undeniable fact is that consider there is a small number of medical doctors have addicted themselves to heroin. Here, their live will be better than the one on the first case because they have a legal supply and have an actual price, moreover because they have stable price they will have a sufficient amount of money to buy the drugs and drop the other cash he had to the investment for example.

Again, Walter Block give interesting comment on the case of heroin as stated on  Defending the Undefendable p.30:

Legalization of heroin has been rejected on the grounds that progress and civilization would come to a halt. The British and Chinese experience with addictive drugs are cited, and we are supposed to picture scores of people lying around in the street, zonked out of their minds. The argument is that anything which interferes with progress, such as the widespread use of heroin, should be prohibited. But there are other things that can interfere with continued progress which most people would not be willing to prohibit-leisure, for one. If employees took vacations which amounted to 90 percent of the working year, "progress" would certainly falter. Should long vacations be prohibited? Hardly. In addition, the present prohibition of heroin does not eliminate access to the drug. Formerly, it was available only in the inner city ghettos; today it can be purchased on affluent suburban street corners and schoolyards.
Now, imagine that the heroin is legalized. There will be no illegal drugs dealer that move price to premium, there will be no drugs gangsters and blood to be spilled of drugs war, the drug - addict will have a tendency to self-sufficient since the price is low and will not pushed to act crime in order to gain his "fix" or you would rather prohibited the drugs and make the price go up, make the drug addict pushed to do crime in order to gain his "fix', and to make another gangster that sell illegal drugs so they can go wars with the police and make the blood spilled. Even do you think it's moral to make the drug-addicts suffered? or rather let's think that is you morally enough to make them suffered because the prohibition of drugs and painstaking price?

Finally the choices is yours. Though the addiction would be devastating, you could use heroin according to your own situation and you could be justified with at least based on moral virtues of ethics for whatever situation you are. For the legalization of heroin it's clearly enough that the prohibition of heroin and other Illegal drugs doesn't work effectively and have a tendency to only make things worse since the drug dealers can move the price to premium and the demand is inelastic. Sadly, the common things we see things now  seems that the prohibition of drugs caused a countless amount of suffering and social upheaval the reverse results of what the law wanted to be to create less suffering and social upheaval.

Refference: Block, Walter. Defending the Undefendable: The Pimp, Prostitute, Scab, Slumlord, Libeler, Moneylender, and Other Scapegoats in the Rogue's Gallery of American Society. Ludwig von Mises Institute. Auburn, Alabama. 2008

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Inca Empire and The Mistery of it Economics The Macchu Picchu, a UNESCO World Heritage Site near Cusco in Peru, at twilight Français...

Inca Empire and The Mistery of it Economics

The Macchu Picchu, a UNESCO World Heritage Sit...
The Macchu Picchu, a UNESCO World Heritage Site near Cusco in Peru, at twilight Français : Le Machu Picchu, site du Patrimoine mondial de l'UNESCO près de Cuzco au Pérou, au coucher du soleil Türkçe: Dünya Mirasları Listesi'nde bulunan Peru'daki Macchu Picchu'nun alaca karanlıktaki görüntüsü. (Photo credit: Wikipedia)
In the fifteenth and sixteenth centuries, the Inca Empire was the largest South America had ever known. Centered in Peru, it stretched across the Andes' mountain tops and down to the shoreline, incorporating lands from today's Colombia, Chile, Bolivia, Ecuador, Argentina and Peru - all connected by a vast highway system whose complexity rivaled any in the Old World. Rich in foodstuffs, textiles, gold, and coca, the Inca were masters of city building but nevertheless had no money. In fact, they had no marketplaces at all. The Inca Empire may be the only advanced civilization in history to have no class of traders, and no commerce of any kind within its boundaries. How did they do it?

Many aspects of Incan life remain mysterious, in part because our accounts of Incan life come from the Spanish invaders who effectively wiped them out. Famously, the conquistador Francisco Pizzaro led just a few men in an incredible defeat of the Incan army in Peru in 1532. But the real blow came roughly a decade before that, when European invaders unwittingly unleashed a smallpox epidemic that some epidemiologists believe may have killed as many as 90 percent of the Incan people. Our knowledge of these events, and our understanding of Incan culture of that era, come from just a few observers - mostly Spanish missionaries, and one mestizo priest and Inca historian named Blas Valera, who was born in Peru two decades after the fall of the Inca Empire. The interesting topic is that they did not have market nor money but they foster a international trade to outsider. But how it can be done?

Wealth Without Money

Residential section of the Machu Picchu, Peru.
Residential section of the Machu Picchu, Peru. (Photo credit: Wikipedia)
Documents from missionaries and Valera describe the Inca as master builders and land planners, capable of extremely sophisticated mountain agriculture - and building cities to match. Incan society was so rich that it could afford to have hundreds of people who specialized in planning the agricultural uses of newly-conquered areas. They built terraced farms on the mountainsides whose crops - from potatoes and maize to peanuts and squash - were carefully chosen to thrive in the average temperatures for different altitudes. They also farmed trees to keep the thin topsoil in good condition. Incan architects were equally talented, designing and raising enormous pyramids, irrigating with sophisticated waterworks such as those found at Tipon, and creating enormous temples like Pachacamac along with mountain retreats like Machu Picchu. Designers used a system of knotted ropes to do the math required to build on slopes.  In The Incas: New Perspectives, Gordon Francis McEwan writes:

 With only a few exceptions found in coastal polities incorporated into the empire, there was no trading class in Inca society, and the development of individual wealth acquired through commerce was not possible . . . A few products deemed essential by the Incas could not be produced locally and had to be imported. In these cases several strategies were employed, such as establishing colonies in specific production zones for particular commodities and permitting long-distance trade. The production, distribution, and use of commodities were centrally controlled by the Inca government. Each citizen of the empire was issued the necessities of life out of the state storehouses, including food, tools, raw materials, and clothing, and needed to purchase nothing. With no shops or markets, there was no need for a standard currency or money, and there was nowhere to spend money or purchase or trade for necessities.

So the Inca did engage in trade, but only with outsiders - not among themselves and it means the Inca have foster the international trade thinking. The secret of the Inca's great wealth may have been their unusual tax system. Instead of paying taxes in money, every Incan was required to provide labor to the state. In exchange for this labor, they were given the necessities of life. Of course, not everybody had to pay labor tax. Nobles and their courts were exempt, as were other prominent members of Incan society. In another quirk of the Incan economy, nobles who died could still own property and their families or estate managers could continue to amass wealth for the dead nobles. Indeed, the temple at Pachacamac was basically a well-managed estate that "belonged" to a dead Incan noble. It's as if the Inca managed to invent the idea of corporations-as-people despite having almost no market economy whatsoever.

Agriculture Focused

Agriculture (Photo credit: thegreenpages)

One of the outstanding questions for scientists and historians who study the Incas is why this wealthy, sophisticated culture developed scientifically and culturally without ever inventing markets. One possibility is that life was so difficult to sustain in their environment that all their innovations revolved around agriculture rather than economics. In other words, the Inca Empire was optimized to prevent starvation rather than to foster trade. A few years ago, a group of archeologists took core samples in Cuzco valley in Peru, and found evidence for thousands of years of agriculture in the area, including animal husbandry, most likely of llamas. In a paper summarizing their findings, archaeologist A.J. Chepstow-Lusty and his team suggested that the Incas focused their technological and cultural institutions around food production and land management, rather than market economies. This may have been necessary in a region where droughts had likely wiped out a previous civilization (the Wari), and where climate fluctuations were a constant hazard. The rise of the Inca Empire coincided with a period of relative climate stability, but the peoples in the area would be well aware that this temperate spell could end at any time.

Chepstow-Lusty and his colleagues write:

The scale of anthropological manipulation and transformation of the landscape in the south-central Andes appears to have increased after ca. AD 1100, probably in response to a climatic backdrop that was relatively warm, dry and essentially stable. The development of major irrigated terracing technology may have been increasingly necessary in these regions to obviate conditions of seasonal water stress, thereby allowing efficient agricultural production at higher altitudes. The outcome of these strategies was greater long-term food security and the ability to feed large populations. Such developments were exploited by the Inca of the Cuzco Valley, who were emerging as the dominant ethnic group of the region as early as ca. AD 1200. A healthy agricultural surplus supported their economic and political potential, enabling them to subjugate other local independent states and to effectively centralize power in the Cuzco region by ca. AD 1400.
So how do you become a continent-dominating empire without cash? In the case of the Incas, it's likely that the technologies that granted them agricultural surplus (extra food and textile materials) helped them with their expansive empire-building. Food was their coin; pure labor structured their economy.Some have argued that the Inca Empire was the ideal socialist state, while others have called it an authoritarian monarchy. In truth, the Inca probably created an empire like many others. Its leaders were distracted by civil war and internecine squabbles among the nobility. And its slaves and laborers built the dramatic works dreamed up by pre-Columbian civil engineers. What's remarkable is that evidence suggests those slaves and laborers were probably well fed. Perhaps more remarkable, in this era where markets are associated with civilization, is the idea that an empire could achieve so much without ever spending a dime.


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