4.2.3 - Assessment Of A Country As A Production Location

Question 1

Factors affecting choice of production location

Answer 1

Costs of Production- Wages
Skills and Availability of Labour Force - Unemployment = Available Labour, School Ranking = Skill
Infrastructure = adequate road, rail, sea and air transport systems
Location in Trade Bloc = Some businesses may start production in a country as a way into a trade bloc.
Government Incentives = The government of a country may offer incentives for businesses to set up there
Ease of doing business = a mixture of 11 indicators such as; labour regulations, construction permits, land availability and time taken to build a warehouse
Political stability = Companies often prefer to locate in countries with stable political climates.
Natural resources = Some countries have an advantage that they have natural resources that are not found elsewhere
Likely Return on Investment = Setting up production in another country is expensive; investors need to know that the money they’ve invested will be returned with profits