The economic case for free software in the South

One of the big issues at the Asia Commons conference I attended, and I have yet to blog about, was the importance of free software for the economic development of the countries in the South. Robin Miller has a good recap of that argument:

“we need to look beyond the software industry — and beyond software pricing — to see what effects free and open source software have on a country’s economy.

Let’s take a $1,000 software budget and spend it two ways:

  • As license fees that go to a foreign corporation
  • As local spending to modify a free software package

Money sent to a foreign corporation does nothing to bolster the local economy. Money used to pay local developers gets spent locally on food, rents or mortgages, services, and in many other ways. The businesses a local software developer patronizes spend money locally themselves. The total multiplier effect of that $1,000 may be anywhere between three and six, depending on the economic model you use, but in any case we’re saying that $1,000 put into the pockets of local software developers is worth between $3,000 and $6,000 in value to the country where it is spent. In the case of free software modified where it is being used, the country doing the spending reaps that benefit. If that same money goes out of the country as licensing fees, it will most likely benefit a North American or European country, since North America and Europe are home to the overwhelming majority of proprietary software companies.”
(image courtesy of Asia Commons)

1 Comment The economic case for free software in the South

  1. Pingback: Bricolab » Free software, the capacity to tinker, and local economies

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