If it were true that capital flows where wages are lowest, we would expect Burkina Faso and other impoverished low-wage countries to be awash in foreign investments. The claim has testable implications, so we can check. During the 1990s, 81 percent of U.S. foreign direct investment went to three parts of the world: desperately poor Canada, impoverished Western Europe, and starving Japan. Developing nations (with rising wages) such as Indonesia, Brazil, Thailand, and Mexico accounted for 18 percent. And the rest of the world, including all of Africa, shared the remaining 1 percent.
“Globalization is Grrrreat!” Tom G. Palmer of the Cato Institute
"Money is as money does."
...or does it?
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