Low labour costs with proper credit strategy
We have argued earlier that the emerging economy firms generally have lower labour costs. As per one of the surveys in early nineties, an experienced software engineer earned about US$10,000 a year in India, which is only about 20 per cent of the level of salary of a person with comparable skills in the US (Vijayan, 1996). The wage difference between the developing and developed countries may be more apparent in other labour intensive industries, such as textile, toys, electronics, and so forth. Although the wage level in some emerging economies is increasing, it is still lower than that in the advanced countries.
Such a resource is rare, inimitable, and non-substitutable for the emerging economy fi rms. Even though fi rms from advanced economy may reduce their costs by outsourcing, this will only result in a comparatively better position as compared to other fi rms from advanced countries.
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