facilities Samsung. Korean would like to build production Samsung for its consumer electronics products to serve the North American markets. could locate its production facilities anywhere in North America if the firm is concerned with trade barriers imposed by NAFTA. Samsung initially chose to locate its production facilities in northern Mexico rather than in Canada or the United States, mainly because it wanted to take advantage of the lower costs of labor in Mexico Labor services in a country can be severely underprice relative to their productivity because workers are noi allowed to freely move across national boundaries to seek higher wages. Among all factor market the market is the most imperfect Severe imperfections in the labor market lead to persistent wage differentials among countries. Exhibit 16.5 provides the hourly labor costs in the manufacturing sector for elected countries in 20 Compared with Belgium, hourly compensation for factory workers is about $26 less in Spain. The hourly compensation is only $6.48 in Mexico. compared with $35.53 in the United States. The exhibit shows that the average hourly labor cost ranged from S60.40 in Switzerland to $0.37 in Bangladesh