4.2.3 Assessment of a country as a production location Flashcards
What are the pull factors contributing to moving production to another country?
8
- Cost of production
- Skills of workforce
- Infrastructure
- Location in trading bloc
- Gov incentives
- Ease of doing business
- Political stability
- Natural resources
What is meant by labour intensive?
1
- Process relying more on people than machinery
What is capital intensive?
1
- Process relying more on machinery than people
What is a factor to consider in terms of low production costs in another country?
2
- How labour intensive the production process is
- May not benefit from low wage
Why may skills of workforce be a consideration when assessing a country as a production location?
1
- No strong education system to skill staff w = not attractive
Why may location in a trading bloc be a pull factor for a countries production facility?
1
- No tariffs due to no need for import
What are the reasons for a countries government incentives?
2
- Job creation
- Extra tax rev
Examples of possible government incentives?
2
- Grants to purchase land or machinery
- Tax breaks
Why is ease of doing business a consideration when assessing a country as a production location?
1
- Know how much regulation, gov interference, bureaucratic inefficiency
Why is a lack of political stability a consideration when assessing a country as a production location?
1
- Policy changes = ^lvl of investment to start producing, long to pay back, +return on investment
Why is the availability of natural resources a pull factor when assessing a country as a production location?
1
- Large quantities of bulky resources = expensive transport over distance
What is a false economy?
1
- Cheap but may limit future rev the loco can earn
Cost of manufacturing in China (2004) vs. 2014 relative to USA’s costs if USA = 100?
2
- 2004 = 86.5
- 2014 = 95.6
