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yes, but within that place, they're not so relevant
by marcus_holmes 6y ago
yes, but within that place, they're not so relevant
- marcosdumay 6y agoYes, they are. The ratio is relevant within the place, even in insulation. That ratio basically determines the economy productivity.
- marcus_holmes 6y agoAh, OK, I see. I'm saying "the fact that Ecuadorian labour earns less than US labour doesn't matter to an Ecuadorian furniture shop owner because everything costs less in Ecuador, including furniture". You're saying "labour costs are less in Ecuador relative to capital costs, so it's more affordable for business owners to hire more people instead of buy more trucks" is that right?
- marcosdumay 6y agoYes, that's right. Getting on a tangent, the market for capital goods is much more globalized than for labor, so capital prices vary less from one place to the other. As a consequence, when everything is cheaper on some place, it usually means that labor is cheaper relatively to capital too.