HR-Extra Credit

HR-Extra Credit

With the globalization at play in most of the world 's economies , there is a tendency for labor jobs in First World countries to be shifted to low-wage countries . There are explanations for such tendency . For one low-wage countries offer multinational corporations cheap sources of labor . Wal-Mart , for example expanded in China because the Chinese government keeps labor wage in the country floating that is corporations can have a freehand on setting labor prices (depending on the category of the laborer employed . To quote Lee (prime minister of Singapore

, They have low costs of living , they don 't have to come to your country , you pay them at their wage levels (Chanda 1 . In short shifting jobs to low-wage countries enables many multinational corporations to minimize their costs . Added to that , in Keynesian economics , by allowing the price of labor to be free-floating results in greater investment benefiting both the host country and the multinational corporation (Keynes , 218 . Hence , this results in greater efficiency and cost-effectiveness for multinational corporations as well as increased per capita output for host countries (capital building would then result

The job shifting though has several disadvantages for most First World countries . Because labor prices in those countries are usually above the market price , investments will tend to decline . Central headquarters of big corporations will be forced to expand overseas as profit motive in the country decreases . To quote Lee , so long as you are driven by profit to sell your goods at the lowest possible cost and to sell the maximum number of goods or services , how can you stop it (Chanda 1 . In low-wage countries , labor price is equal or less than the market price and the price of the inputs of production are also equal to the market price . These factors drive corporations to concentrate their capital in these countries . Hence , this results in higher unemployment rates for most of the world 's major economies , putting per capita output down . The low-wage countries though are gradually accumulating capital at the expense of its labor force

References

Chanda , Nayan . Movement of Jobs to Low-Wage Countries is Unstoppable YaleGlobal , 2 February 2004 . URL HYPERLINK "http /yaleglobal .yale .edu /display .article ?id 3231 http /yaleglobal .yale .edu /display .article ?id 3231 . Retrieved September 19 , 2007

Keynes , John Maynard . The General Theory of Employment , Interest and Money . Macmillan Cambridge University Press , England , 1936

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