ACCUMULATION, EXPORTS AND THEIR EFFECTS ON WAGES IN DEVELOPING COUNTRIES : A COMPARATIVE STUDY OF SELECTED ASEAN COUNTRIES

Abstract

Many developing countries believe that an export-oriented economy find the accumulation of capital are the best ways of achieving economic growth. However, the dependency school Economists argue that then a country becomes more 'open', it will become more dependent on developed countries, and it is this dependency that causes the under­development. Furthermore, the dependency economists also argue that when the country is more export-oriented, workers in the international sector will receive higher wages than others, and, increase in foreign investment will worsen the functional income distribution against the workers. In this study of Singapore, Malaysia and the Philippines, it seems that workers in the export-oriented industries do not always and everywhere receive relatively higher wages. However, foreign investment does have some effect in wage differentials and indeed causes income inequality to some extent. Yet, Singapore, which has the largest foreign investment (as a percentage of her total investment), shows the least wage inequality. What this suggests, in this study, is that other institutional factors such as government policies may have a moderating effect on income inequality; and that even if an economy becomes increasingly industrialized and export­ oriented, unequal income distribution is not necessarily an unavoidable and uncontrollable evil.