Pakistan to get 115 SP artillerys

[Bull]

Yes, by nations which face high labour costs and hence substitute out of Artillery which is relatively labour intensive into guided systems which are relatively labour un-intensive. Like Russia and U.S.

So is that the only reason ,isnt it more efficient also?

 

[sigatoka]

So is that the only reason ,isnt it more efficient also?

Efficiency depends on the relative prices of inputs. When labour is expensive relative to capital then Guided systems become Efficient. When labour is cheap relative to capital then Artillery becomes Efficient.

 

[Bull]

Efficiency depends on the relative prices of inputs. When labour is expensive relative to capital then Guided systems become Efficient. When labour is cheap relative to capital then Artillery becomes Efficient.

I wasnt speaking bt cost efficency but firing efficiency.

 

[sigatoka]

I wasnt speaking bt cost efficency but firing efficiency.

Mmm.......a guided MLRS system is more effective than Artillery. Thats true. But still doesnt change what i said earlier.

 

[sigatoka]

Let me try to properly explain what I meant. Capital is free to move around the world therefore the price of Capital is the same around the world (adj for risk). Labour on the other is hand is not free to move around freely and therefore the price of labour is different in different countries.

Back to analysis.

1)Lets assume 2 Artillery pieces is needed to do same job as one MLRS piece.

2)Artillery requires 4 men to a piece while MLRS requires one man.

3) assume that MLRS costs 3million per piece while Artillery costs one million per piece.

4) Assuming opportunity cost of capital is 5% per year is the same in U.S. and Pakistan and Labour cost is 30,000 in U.S. and 5,000 in Pakistan.

The cost per year for U.S. to maintain one MLRS per year is 180,000 (5%*3Million + 1man * $30000)

The cost per year for U.S. to maintain two Artillery units per year which gives same capability as one MLRS is (4men * 30,000 + 5% * 1Million)*2 = $340,000


The cost per year for Pakistan to maintain one MLRS per year is $155,000 (5%*3Million + 1man * $5,000)

The cost per year for Pakistan to maintain two Artillery units per year which gives same capability as one MLRS is (4men * 5,000 + 5% * 1Million)*2 = $140,000

Therefore it can be seen that because of the differences in the relative costs of labour and capital between U.S. and Pakistan, they will and in fact should have differenct force structures. Pakistan will have more labour intensive military while U.S. will have more capital Intensive Military.

 

[Bull]

You explained it well,but i didnt counter that argument, i was looking at the fighting efficiency.

Are u a economics graduate???

 

[sigatoka]

You explained it well,but i didnt counter that argument, i was looking at the fighting efficiency.

Are u a economics graduate???

Still in the process of graduating. I just wanted to point out that you have to consider the differences in Labour rates before saying what is good for one country.

 

[Bull]

Still in the process of graduating. I just wanted to point out that you have to consider the differences in Labour rates before saying what is good for one country.

Ok pount taken.

Which year are you in?

 

[sigatoka]

Ok pount taken.

Which year are you in?

Last year (3rd year)