Message-ID: <s385a78c.064@crs.loc.gov> Date: Fri, 23 May 1997 14:12:08 -0500 From: Jonathan Sanford <mailto:JSANFORD@CRS.LOC.GOV> Subject: Re: Boring - questions -Reply To: mailto:DEVEL-L@AMERICAN.EDU
I thought Tom Hodges reply to Florin Jurcovici's question about why wages are often lower in developing countries was good. I would add two additional points.First, productivity of workers in developing countries is often somewhat lower than in developed countries. Maybe not in Romania, but in many countries health, education, training and experience are at lower levels and employees require more training and supervision.
Second, the difference in monetary wages between developing and developed countries is greater than the actual difference in purchasing power. The cost of traded goods is about the same worldwide. The costs of services, rents and other non-traded goods, on the other hand. is often lower in developing countries. Most people in developing countries spend a much higher percentage of their income on local products and non-traded goods. Consequently, the wage that translates into 25 cents an hour goes much further in the local marketplace than 25 cents would go if paid to a worker in a developed country.
Jon Sanford