Why do people who live in undeveloped countries get paid less than developed?

Answer 1

Its about opportunity cost, which is the best alternative that one has to forego to pursue a certain opportunity. In undeveloped countries, there aren't that many jobs, which means the opportunity cost is close to zero. You either take the job you can get, or you get nothing. Since there are many workers vying for the same jobs, supply and demand keeps the price low. After all, if you don't want the job, there are ten others lining up to take it from you. The only way to raise wages in these countries is to increase the number of jobs, meaning industries must be established. In order to establish industries, infrastructure in many of them need to be improved. To improve infrastructure, the aid given needs to be put to good use instead of being wasted by corrupt leaders. Unfortunately, it is a very vicious cycle that is very hard to break.

It isn't a cost of living issue, since many of these people are in poverty, meaning they are barely able to make a living. Cost of living would indicate that we get paid say, $10 an hour with bread costing $1 a loaf, and there they get paid $1 an hour with bread costing $.10 a loaf. In that case they would be on par with us with the same standard of living, since they can get the same stuff for their amount of labor. This is obviously not the case. Cost of living is more a reason why someone in Seattle gets paid more than someone in Wichita, Kansas.

Answer 2

The bottom line is they are not as productive. A single employee in a modern industrial plant working like George Jetson might produce thousands of parts per day. Where as Fred Flintstone hammering out parts on an anvil might only produce a few dozen parts per day. The difference is the amount of capital invested to produce the parts.

The reason is usually that undeveloped countries don't protect property rights so investors are not willing to risk building modern plants that might later be seized by the government there.

Answer 3

It's all about the cost of living in a particular country. Like we used to pay 25cents for a loaf of bread 50 years ago, but since our economy has grown there is more people to pay before you get a loaf of bread today. There are not only the farmers, the manufacturers and the grocery store but at least a half dozen people take part of that $1.83-3.50 the loaf of bread is today, including the transportation to and from places. That alone takes a huge chunk with diesal prices through the roof now.
Most underdeveloped countries work there economy locally.. they make the food there and even the clothes there.. so things are cheaper and if it costs less to buy those things wages equal out close to the amount it takes to live.

Answer 4

Because the people who live in the developed countries want to be able to buy everything really cheap, so stuff is manufactured in the undeveloped countries and people are paid a pittance, so that good are cheaper to buy.

Answer 5

Because the cost of living is lower. And based on the law of supply and demand for labor, you will be able to find more people to work lower wages in countries where the cost of living is lower than a country that has a higher cost of living. IE. A person in a 3rd world country only needs to make $3/day to feed his family, while a person in a 1rst world economy needs $10/day. So if you are a company you would go to the 3rd world country because you can fine people willing to work for $3/day, while you will not find that supply in the 1rst world country.

Answer 6

Because the people in developed countries give them loans, with very high interest rates - which forces them to grow crops for profit -rather than food. The poor country will invest the loan in a crop which will pay it off fast. However, the rich countries like to force several poor nations to produce the same cash crop. This keeps the price of the crop down, and the intrest payments last longer, costing far more than the original loan. Porr nations then have to live on poor diets, and work for very low incomes - to undermine the neighbouring country selling the same crop. so they stay poor paying off the loans, which makes the rich counties happy, and the poor countries miserable.

Answer 7

Because the standard of living is lower. For example, I pay $100/mo rent for my house in Mexico and can buy enough groceries to eat well for $25/wk. My electricity is about $7/mo.

Answer 8

Because the whole country is poor! And factories and businesses owned by foreigners know they can pay people a pittance because the poor people don't have many other options and they're not exactly going to complain are they? They are grateful for having a job at all.

Answer 9

Economies are undeveloped, education levels are poor, unemployment is high. In some countries inflation is cronic.

Answer 10

agree with theecnomicguy's answer. Ofcourse standard of living doesn't have much to do as a deciding factor for wages. It is more like a result of the income earned.
just had to comment on some of the others. Ringgit-Indian my god how ignorant are you, ringgit is the malaysian currency not Indian.