Question

Write a note to explain the effects of the following- The decision of MNCs to relocate production to Asian countries.

Answer 1

Hint: The decision of MNCs to relocate production led to the stimulation of capital flows and world trade, this relocation also helped the Asian countries in increase in employment and resulted in quick economic transformation.

Complete answer:
The foreign MNCs competing to capture the world market made the decision to relocate the production to Asian countries because the wages in Asian countries are lower which stimulated world trade.
The impact of decision of MNCs to relocate production to Asian countries are given below:
Due to this relocation, the MNCs got the advantage of cheap labor.
Asian countries brought new technology and production methods.
People in the Asian countries got a greater choice of goods and services and greater employment opportunities were given.
The Growth of economies was the result of rapid economic transformation.
The effects of this decision of relocation led to economic growth and the development of Asian countries like India and China and it was a profitable factor for foreign MNCs. As compared to the producing unit price of Asian countries it was cheaper than the other countries.

Note:The relocation decision was made on account of lower wages and low-cost structure in Asian countries. This relocation helped both the developed and underdeveloped countries and also bought employment, money and material to Asian countries. Both were benefitted. This also increased the global production networks (GPNs).