Doesn't China's currency manipulation really support his argument? If the currency floated at its "correct" levels, China would instantly be uncompetitive and the factors would move to another country. I've already seen several companies moving their production to countries other than China (from China) based on increasing costs relative to other countries.
I fully agree that low wage seeking companies might leave the newly prosperous country. I was asking for examples where "once the corporation has departed, the original country collapses back into poverty."
That has not happened in China, as far as I'm aware. Or India - in fact, India is becoming a seller of higher quality labor, and wages are skyrocketing [1].
[1] A girl I went out with told me she left Bombay (for NY) for the experience. The money would have been better had she stayed (though admittedly Manhattan is cheaper).
