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Title: Labor Costs and Capital Productivity: Some Recent Evidence from a Group of Emerging Economies

Authors: Mehdi SalehiZadeh; Feraidoon (Fred) Raafat

Addresses: Author address listing can be found in the "About the Authors" section at the end of the article.

Abstract: In recent years an increasing number of multinational corporations based in the U.S. (and elsewhere) have been attracted to emerging countries primarily due to lower labor costs and higher returns to capital existing between these economies and that of the U.S. This paper examines a set of data for Mexico, Hong Kong, Korea, Singapore and Taiwan, by considering the method of cointegration, for the period of 1970-1998. The data consists of spreads between labor costs, a measure of capital productivity, currency values against the U.S. dollar, and net flows of long-term capital. The analysis provides a further confirmation of the long-term equilibrium linkage between global capital flows, labor-cost spreads, marginal productivity of capital, and exchange rates.

Keywords: Labor costs; capital productivity; exchange rates; global capital flows; currency value; marginal productivity.

DOI: 10.1504/JBM.2000.141067

Journal of Business and Management, 2000 Vol.7 No.2, pp.43 - 55

Published online: 05 Sep 2024 *