Low salaries increase competitiveness, while high salaries decrease it. That's one of the things you already learn as a kid when you live in an export-driven economy.
Even if your country is not particularly export-driven but you participate in competitive markets, the same effect may apply. For example, the US lost many manufacturing jobs to China, because American salaries were not competitive (low) enough.
Finland is sometimes said to be a country of engineers, for historical and cultural reasons. That doesn't mean engineers are paid well. On the contrary, engineer salaries are low and Finnish engineers like to complain how much more they would earn in Germany. What it does mean is that engineers have a higher social status than in most Western countries, and a lot of people want to be engineers. Finnish companies can hire good engineers with little money.
Finnish companies have traditionally been good at developing technology and bad at commercializing it. Explanations vary, from the low quality of business leadership to the lack of domestic capital; from the small size of the domestic market to foreign companies buying successful startups; from the cultural dominance of heavy industry to the culture of respecting laws and regulations.
It's true, speaking as a US to Finland expat. The median CS grad I've met here in Tampere handily outclasses the CS grads I knew at Northwestern - which is no MIT, sure, but they're definitely no slouches.
Marc Andreessen once described reading a magazine as a teenager and seeing the "Midwest tinkerer" archetype of tech mogul, people who figure out a little bit of everything from scratch because on a farm you just have to do that to stay afloat and then bring that mindset into their SWE work and become minor legends wherever they go, and having this sudden enlightenment moment that shifted him from quiet nerd to confident striver. I spent my honeymoon year in northern Finland and came to the conclusion that the whole country is like that. Except, no one filled them in on just how absurdly good the margins on software can be when you throw business prowess into the mix. So many companies here been punching well below our weight class. (Okay, the very business-hostile nature of making a startup in the 90s/00s didn't help either - that's less the case now.)
I'm convinced it's more sociological than legal, although there are elements of both. My long term aim while I'm here is to be missing link between Finland and Silicon Valley. These guys are genuinely, still, much better than they themselves realize.
Even if your country is not particularly export-driven but you participate in competitive markets, the same effect may apply. For example, the US lost many manufacturing jobs to China, because American salaries were not competitive (low) enough.
Finland is sometimes said to be a country of engineers, for historical and cultural reasons. That doesn't mean engineers are paid well. On the contrary, engineer salaries are low and Finnish engineers like to complain how much more they would earn in Germany. What it does mean is that engineers have a higher social status than in most Western countries, and a lot of people want to be engineers. Finnish companies can hire good engineers with little money.
Finnish companies have traditionally been good at developing technology and bad at commercializing it. Explanations vary, from the low quality of business leadership to the lack of domestic capital; from the small size of the domestic market to foreign companies buying successful startups; from the cultural dominance of heavy industry to the culture of respecting laws and regulations.