Social and Behavioral Sciences Commons^™

Do Foreign Companies Pay Higher Wages Than Their Local Counterparts In Malaysian Manufacturing?, David Lim

Prof. David Lim

This paper shows that foreign companies pay higher wages than their local counterparts in Malaysian manufacturing. Step-wise regression analysis shows that this is due to two factors. The first, and perhaps the more important, is the greater capital intensity of the production processes used by foreign companies. The second is their tendency to pay wages that they consider, or that are considered to be, commensurate with the wages that they pay in their home countries. This may be called the demonstration effect of wage remuneration in less developed countries.