

A wage revolution could end extreme poverty in Asia - nbouscal
http://oxfamblogs.org/fp2p/a-wage-revolution-could-mean-the-end-of-extreme-poverty-in-asia-and-massive-knock-on-effects-for-africa

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austinz
Definitely an interesting article. I do think two points are worth mentioning:

1\. China's 'reserve army of labor' hasn't necessarily been exhausted yet.
Wages in the inland provinces still lag those found in the coastal provinces,
and government policy is at least nominally trying to encourage investment and
development there in an effort to close the gap. Smaller countries looking to
jump-start their economies through export-driven industrialism may still need
to compete with those provinces and should keep in mind their advantages and
disadvantages (e.g. high freight costs).

2\. It isn't enough for high wages alone to drive low-paying factory work out
of China, Vietnam, or the other major manufacturing nations. Quality
infrastructure, a reasonably well-educated workforce, political stability, etc
are all contributing factors. Leaving aside the debate over whether export-
driven industrialism is good or not, rising wages provide an opportunity for
smaller countries to capture these jobs, but only if they take the initiative.

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crdoconnor
>China's 'reserve army of labor' hasn't necessarily been exhausted yet. Wages
in the inland provinces still lag those found in the coastal provinces, and

Inland province wages lag because building a factory in backwater China
guarantees that you will be cut off from China's industrial infrastructure and
your shipping costs will skyrocket. Hence no jobs there. If you want a job,
you move to the coast.

Those regions really can't compete with places like Vietnam or Bangladesh that
have access to a decent port AND have the same level of wages. Their best hope
for rising wages is still from migrant workers funneling cash home.

>government policy is at least nominally trying to encourage investment and
development there in an effort to close the gap.

I don't think it's really working. A large proportion of that investment (if
not most) is being blown on useless projects and siphoned off by corrupt local
government officials and their cronies. Worse, it's (nominally, at least) debt
driven investment, too, so the provinces will need enormous bailouts or
stimulus at some point if they are not going to suffer a crippling depression.

This happens in coastal China too, but the corruption and level of
malinvestment isn't nearly as bad.

I think on some level inland China will always be very poor. I can well
imagine quality of life in coastal Chinese cities overtaking the US and
Bangladeshi/Vietnamese cities moving to first world status while dire poverty
still exists in the Chinese countryside.

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virmundi
It's an interesting trend. I wonder if it might come too late. We're seeing an
up-tick in automation. More and more menial jobs are becoming automatic. The
labour force on the low end is not as needed. I wonder what will happen if the
industrialist in the Asian countries gain enough capital to buy heavy
equipment. Will the wage trend continue grow?

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FranOntanaya
We are probably long overdue a relative price drop on all the products that
have had substantial automation. Once enough businesses catch up the price
competitions should restart -- for now it's just the first ones past the mark
reaping larger benefits.

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GFK_of_xmaspast
products such as?

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slurry
Buried lede is how far India is lagging.

Rural wages "[d]oubling in China in the last decade, tripling or quadrupling
in Vietnam. A bit slower in Bangladesh, but still up by half."

And yet the chart at the bottom shows India up by only 35%.

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revelation
What an odd title. Higher wages could end poverty, which is defined by, you
guess it, wages?

The more interesting thing here would be: are wages rising as fast as we would
expect them to? I'm pretty sure even the most incompetent administration can't
possibly produce both a system that grows the economy by double digits yearly
yet keeps wages low, and still stay in power.

But there are certainly ways a countries administration can go to make the
upswing benefit only parts of society, and benefit those already in the higher
echelons vastly more than those lower.

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Houshalter
If I understand it correctly, it's that higher wages in China could end
poverty in _other_ places too. Because China will import more things from
those countries, and factories will move there to the lower wages.

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madengr
Yep, Africa is the last stop in the race to the bottom. Manufacturing won't
happen though without a stable infrastructure such as transportation and
electricity, and never mind being necklaced or macheted.

~~~
crdoconnor
A lot of Africa also suffers from Dutch disease and the resource curse.

