EXPECTED WAGES OF SELECTED NME COUNTRIES

1995 INCOME DATA

ITA/IA

Revised June 2, 1997

Practitioners and academics commenting on the application of the U.S. antidumping law to NMEs (and, in particular, on the use of economically comparable countries as surrogates) have tended to equate comparable per capita GDPs with comparable wages. The Department has examined this proposition, analyzing wage and per capita income data from past AD investigations and reviews involving nonmarket economy countries. The Department has concluded that while wages and per capita GDP are positively correlated, there is great variation in the wage rates of the market economy countries that the Department typically treats as being economically comparable. As a practical matter, this means that the result of a NME case can vary widely depending on which of several economically comparable countries is selected as the surrogate.

Because of the variability of wage rates in countries with similar per capita GDPs, section 351.408(c)(3) of the Department’s new AD regulations (62 FR 27296, May 19, 1997) requires the use of a regression- based wage rate -- essentially an average of the wage rates in market economy countries viewed as being economically comparable to the NME. The first set of such wages are attached and were estimated using the method of ordinary least squares and data from approximately 45 market economy countries. The Department will update these wages annually.


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Expected Wages of Selected NME Countries in US Dollars


  Country Per Capita GDP 1995 Expected Wages
Czech Republic 4597 2.74
People's Republic of China 572 0.67
Russian Federation 2410 1.61

  Country Per Capita GDP 1995 Expected Wages
Armenia 730 0.75
Azerbaijan 480 0.62
Belarus 2070 1.44
Georgia 440 0.60
Hungary 4120 2.50
Kazakhstan 1330 1.06
Kyrgyz Republic 700 0.73
Moldova 920 0.85
Romania 1480 1.13
Tajikistan 340 0.55
Turkmenistan* 920 0.85
Ukraine 1630 1.21
Uzbekistan 970 0.87


Equation: Wages = (GNP/1000)(0.51622)+0.37049357



Notes:
General: Countries selected were all non-hyperinflationary countries for which wage data for 1990 or later was reported in 1996 Yearbook of Labour Statistics, International Labour Office ("ILO"), (Geneva: 1996), and for which GDP data was included in International Financial Statistics, International Monetary Fund, May 1997, and for which we were able to locate exchange rate information.
Wages: Wage rates as reported in 1996 Year Book of Labour Statistics, International Labour Office ("ILO"), (Geneva: 1996), Chapter 5B: Wages in Manufacturing. The years of the reported wage rates range from 1990 to 1995.

Wages reported by ILO in most cases are based on cash payments received from employers. In addition to remuneration for normal working hours, this includes such items as remuneration for overtime, bonuses, holiday pay, incentive pay, pay for piecework, and cost-of-living allowances. See, 1996 Yearbook of Labour Statistics for further discussion of wage data.

Where monthly or daily wages were given, hourly wages were calculated assuming 24 working days per month, 5.5 working days per week, 8 working hours per day.

Inflator: Wages were inflated, where the base year was not 1995, using the Consumer Price Index (CPI) data reported in International Financial Statistics, International Monetary Fund, May 1997. Inflator rate was calculated by dividing the CPI for 1995 by the CPI for the year the wage rate was reported.

Exchange Rates: Exchange rate is expressed as foreign currency per one U.S. dollar. Rates are as reported in International Financial Statistics, International Monetary Fund, May 1997. Rates are market average for the entire year, except in the case of Egypt, where average of year-end 1994 and year-end 1995 was used to calculate annual average.

National Income: 1995 GDP data, as reported in International Financial Statistics, International Monetary Fund, May 1997, were divided by total 1995 population of the respective countries, as reported in World Population Prospects: The 1996 Revision, United Nations, Annex I, to calculate 1995 GDP per capita.

Where 1995 GDP data were unavailable for certain non-market economy (NME) countries, we have used 1995 GNP per capita as reported in World Development Indicators 1997, World Bank, 1997.

Analysis: Regression analysis is ordinary least squares analysis.


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Countries:Wages:
Argentina 1.6750 pesos/h (4)
Australia 15.85 dollars/h (4)
Austria 32173 schillings/m (5)
Belgium 411.83 francs/h (4)
Bolivia 958 bolivianos/m (5)
Botswana 551.00 pula/m (4)
Canada 16.2 dollars/h (5)
Chile 118612 pesos/m (3)
Costa Rica 54365 colones/m (5)
Denmark 108.26 kroner/h (2)
Dominican Republic 2010 pesos/m (5)
Ecuador 1676.1 sucres/h (3)
Egypt 70 pounds/w (3)
El Salvador 5.35 colones/h (3)
Finland 60.09 markkaa/h (5)
France 50.63 francs/h (3)
Germany 25.46 mark/h (5)
Greece 1243.30 drachmas/h (5)
Guatemala 775.22 quetzales/m (3)
India 1094.9 rupees/m (1)
Ireland 6.47 pounds/h (5)
Israel 27.0 new shekels/h (5)
Japan 278800 yen/m (5)
Jordan 4.91 dinars/d (3)
Kenya 3324.2 shillings/m (1)
Korea 1123900 won/m (5)
Mauritius 131.31 rupees/d (5)
Mexico 9.11 nuevos pesos/h (5)
Netherlands 23.91 guilders/h (4)
New Zealand 14.85 dollars/h (5)
Norway 112.27 kroners/h (5)
Pakistan 1735.00 rupees/m (0)
Paraguay 480081 guaranies/m (4)
Peru 23.90 nuevos soles/d (5)
Philippines 5584 pesos/m (3)
Poland 699.2 new zlotys/m (5)
Portugal 436 escudos/h (3)
Singapore 2157.3 dollars/m (5)
South Africa 2446 rand/m (3)
Spain 1263 pesatas/h (5)
Sri Lanka 16.52 rupees/h (5)
Sweden 106.95 kronor/h (5)
Switzerland 26.77 francs/h (3)
Thailand 4230 baht/m (4)
United Kingdom 7.85 pounds/h (5)
United States 12.37 dollars/h (5)
__________
The statistics are reported in the following format "local currency/measurement(last digit of reporting year)."
The measurements are as follows: /h=per hour, /d=per day, /w=per week, /m=per month.

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The chart calls the Lotus 123R4 worksheet gdp97a.wk4


gdp95.jpg


Regression Output:
Constant 0.37049357
Std Err of Y Est 1.91429
R Squared 0.92208485
No. of Observations 45
Degrees of Freedom 43
X Coefficient(s) 0.00051622
Std Err of Coef. 0.00002288


Equation: Wages = (GNP/1000)(0.51622)+0.37049357

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Ranking by GDP Per Capita


Country Wages
Per Hour		 Inflator to
1995		 Exchage Rate
1995		 Wages in
1995 US$		 1995 GDP
in US$
Kenya17.31352.456651.43000.827330
India5.70261.444232.42700.254365
Pakistan9.03651.700031.64300.485431
Sri Lanka16.52001.000051.25200.322720
Bolivia4.98961.00004.80001.039941
Egypt1.59091.25183.38950.588974
Philippines29.08331.179025.71401.3331093
Jordan0.61381.05940.70050.9281237
Guatemala4.03761.20135.81030.8351392
Dominican Republic10.46881.000013.59700.7701510
Ecuador1676.10001.56612564.50001.0241565
El Salvador5.35001.21688.75500.7441688
Paraguay2500.42191.13441970.40001.4401860
Peru2.98751.00002.25301.3262501
Costa Rica283.15101.0000179.73001.5752685
Thailand22.03131.056924.91500.9352825
Poland3.64171.00002.42501.5023059
Mexico9.11001.00006.41941.4193064
Botswana2.86981.10482.77161.1443118
South Africa12.73961.18403.62664.1593230
Mauritius16.41381.000017.38600.9443527
Chile617.77081.2089396.78001.8824736
Argentina1.67501.03320.99981.7318055
Korea5853.64581.0000771.27007.59010142
Greece1243.30001.0000231.66005.36710936
Spain1263.00001.0000124.690010.12914122
Israel27.00001.00003.01138.96615717
New Zealand14.85001.00001.52359.74816782
Ireland6.47001.00000.623510.37717465
United Kingdom7.85001.00000.633512.39119041
Canada16.20001.00001.372411.80419239
Australia15.85001.04721.277312.99420612
Finland60.09001.00004.366713.76124471
Austria167.56771.000010.081016.62224545
Netherlands23.91001.01961.605715.18325532
Singapore11.23591.00001.41747.92725580
Sweden106.95001.00007.133314.99326079
France50.63001.03434.991510.49126483
Belgium411.83001.014429.480014.17126582
United States12.37001.00001.000012.37027156
Germany25.46001.00001.433117.76629586
Denmark108.26001.05455.602020.37933073
Norway112.27001.00006.335217.72233737
Japan1452.08331.000094.060015.43840862
Switzerland26.77001.02641.182523.23542413


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Calculation of 1995 GDP Per Capita in U.S. Dollars



Country 		1995 GDP
in millions of
local currency
Exchange Rate
1995 		GDP
in millions of
local currency 		1995
Population
in thousands
GDP per capita
in US$
Argentina2809998280.0734.7688.055
Australia470.3712773368.25317.86620.612
Austria1,990,600100810197.4618.04524.545
Belgium7,936,000294800269.19910.12726.582
Bolivia33.47480006.9737.414941
Botswana12,530.3277164.5211.453.118
Canada776.313724565.65129.40219.239
Chile26,702,100396780067.29714.214.736
Costa Rica1,652,03817973009.1923.4242.685
Denmark967.756020172.7425.22333.073
Dominican Republic160.58713597011.817.8231.51
Ecuador46,005,0002564500017.93911.461.565
Egypt2053389560.48162.096974
El Salvador83.688875509.5595.6621.688
Finland545.7343667124.9755.10724.471
France7,680,900499151,538,79658.10426.483
Germany3,459,600143312,414,06781.59429.586
Greece26,484,4002316600114.32410.45410.936
Guatemala85.8935810314.78310.6211.392
India10,985,800324270338.786929.005365
Ireland38.616623561.9323.54617.465
Israel261.4873011386.8355.52515.717
Japan480,693,0009406005,110,493125.06840.862
Jordan4,654.670056.6455.3731.237
Kenya460.8055143008.9627.15330
Korea351,295,0007712700455.47644.90910.142
Mauritius68.51738603.941.1173.527
Mexico1,792,69564194279.26291.1453.064
Netherlands634.716057395.27915.48225.532
New Zealand91.0451523559.7623.56116.782
Norway925.8763352146.1474.33233.737
Pakistan1,856,50031643058.67136.257431
Paraguay17,698,500197040008.9824.8281.86
Peru132.622253058.86423.5322.501
Philippines1,906,30025714074.13567.8391.093
Poland286.02624250117.94938.5573.059
Singapore120.6291417485.1063.32725.58
South Africa485.75236266133.94141.4653.23
Spain69,779,0001246900559.6239.62714.122
Sri Lanka661.90251252012.91517.928720
Sweden1,634,80071333229.1798.78826.079
Switzerland359.411825303.9327.16642.413
Thailand4,098,800249150164.51158.2422.825
United Kingdom700.5863351,105,86658.07919.041
United States7,253,800100007,253,800267.11527.156


NME Countries
Czech Republic1,252,10026541047.17610.2634.597
People's Republic
of China		5,826,10083514697.621,220,224572
Russian Federation1,630,956,00045590000357.744148.462.41