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If workers in developing countries were paid the same as in Western Countries apart

If workers in developing countries were paid the same as in Western Countries apart from inflation what would happen. For example the average construction labourer in Nairobi gets paid 50 US cent an hour what would happen if they all went on the average UK building workers wage (assuming it will be quite abit over 6.31 and hour) couldn't the builder charge more for the building to accommodate costs? Or would the Central Bank start having to print more money to support this (which may not matter according to the conspiracy theorists as inflation is already taking place the conspiracy theorists as the money is not backed by gold or silver or anything else so its easier for government to keep printing money)? Or is there not enough productivity in developing countries to support Western like wages?

Reply 1

No Man

It can't happen quickly.

South Korea is a good example of a country that used to be in the same league as Latin America/South East Asia, but it's now one of the world's most advanced countries, even though it took 30+ years to happen.

Reply 2

TheTechN1304

It would likely end in some form of hyper-inflation (driven by the wage price spiral) - If workers in the developing world saw higher wages, the companies employing them would increase product prices to maintain high profit margins. As a result, employees would demand higher pay (as their new wage wouldn't buy as much as it used to) and there'd be a further increase in prices by companies.

In reality, it would probably be a lot more complicated than this though, as higher prices would mean countries like china would be less internationally price competitive, and so we would import less from these countries. This would lead to a whole bunch of economic problems.

As No Man already said though, something like this couldn't happen overnight. Also, although you may think the pay rates are low compared to western standards, the cost of living is a lot lower than you probably imagine, so it's all relative.

Reply 3

Rakas21

If it was mandated by government and happened overnight you would crush the economies of countries that rely on manufacturing as companies would flock back to the west. Commodity exporting countries could probably cope though.

It naturally happens over time as economies grow though.

Reply 4

BlueSam3

Original post by No Man

That, and South Korea (and the other Tiger Economies) are widely regarded as having pulled off an economic miracle by advancing their economies that quickly.

Reply 5

reciproversexclu

South Korea was under the aegis of the USA, and was a 'point to prove' cf N.Korea.

Reply 6

Rakas21

Original post by BlueSam3

That, and South Korea (and the other Tiger Economies) are widely regarded as having pulled off an economic miracle by advancing their economies that quickly.

Hong Kong from 1960-1990 was regarded as the bastion of capitalism. Singapore has always been a strong market economy (think it was already wealthy for the region until the world wars). Japan like Germany used investment from the US and geared their economy around (for the day) high tech manufacturing. It should also be noted that Japan already had functioning health and welfare systems before western Europe. South Korea was a lesser version of Japan but of the 4 it's probably got the better economy right now.

Basically i think they had the advantage of using our experiences and recognising failures.

Reply 7

TheRageTrain

Remember a wage of 50 cents does not mean literally that, t would have a different purchasing power in their own country. Although it is still too low.

A lot of companies that rely on cheap labor would collapse overnight, unfortunately we wouldn't allow this to happen although I think we should sometimes.