Question

Write a note to explain the effects of the following:

The decision of MNCs to relocate production to Asian countries.

Answer 1

The decision of MNCs to relocate production to Asian countries had the following effects:

1. It stimulated world trade and capital flows.
2. Low wages in countries such as China have made them attractive investment destinations for foreign multinational corporations striving for global market share. For example, Indian marketplaces are flooded with China-made televisions, mobile phones, and toys. This is due to the Chinese economy’s low-cost structure, particularly the low wages.
3. The world’s economic geography has changed as countries like India, China, and Brazil have seen fast economic transformations. For example, India has implemented liberalisation and globalisation policies.