The economic success of Asian countries is not due to cheap labour. “It’s not just low wages,” Cambridge University economics professor José Gabriel Palma declared. Although low wages helped start the modern economic development of Asian countries, the key factor was and is lower unit costs – i.e. higher productivity, Engineering News reports.
Asian countries, unlike those of Latin America, or South Africa, have been able to sustain high rates of economic growth for decades and have increased their productivity throughout this period. Latin American countries and South Africa have enjoyed periods of high growth, but have been unable to sustain them.
Other influencing factors included industrial policy, investment in infrastructure, and major reinvestment by the wealthy into the Asian economies.
South Africa, Palma said, falls between Asia and Latin America in productivity and job creation.
By: Keith Campbell