Wage Levels, International Competition, and Integration: The Example of the U. S.

An international comparison of hourly compensation costs for production workers in manufacturing exhibits large differences. In the richest industrialised countries such as West Germany, Switzerland, and Sweden hourly compensation costs are about ten times as high as in newly industrialising countries. Nonetheless, the export performance of high-wage countries is much better than those of low-wage countries. This conclusion emerges very clearly from the import statistics of the U. S. For example, the value of shipments per capita from Canada to the U. S. is about ten times as high as the corresponding value for Mexico. The good export performance of the OECD countries is based on a highly developed infrastructure, which comprises the public infrastructure and supply networks between independent, but coordinated firms. Such an infrastructure is often not well developed in low-wage countries. In a comparison between industrialised countries, however, where the infrastructure is very similar, the question of international competitiveness narrows down to differences in labour costs.