International Business: The New Realities, 5th Edition

Cost, Quality, and Productivity of Labor

Worker wages vary greatly worldwide. So do the quality and productivity of worker efforts. Advanced economies tend to pay relatively higher wages. Hourly wages are particularly high in Northern Europe. Lower wages in emerging markets and developing economies are commensurate with the lower costs of living in those countries. Firms typically pay wages consistent with what local living standards and market conditions require.

Exhibit 17.8 displays the typical hourly wage rates of manufacturing workers in various countries. Firms from the advanced economies usually prefer to manufacture their products in countries with lower wages. Since 2016, U.S.-based multinational enterprises (MNEs) have eliminated more ...