assessment of a country as a production location

Question 1

production location depends on:

Answer 1

• labour costs
• Access to raw materials
• Utility costs, i.e. gas, electricity, water
• Inflation rates
• the type of product = Less labour intensive means less focus on labour costs and more on skill

Question 2

explain skills/education

Answer 2

Businesses need to analyse what skills they need
- Locate in the most appropriate place, i.e. high skilled engineers needed / low-skilled low-cost labour
- Look at overall education levels, number of graduates, and specific skills of the workforce

Question 3

explain availability

Answer 3

• Low unemployment rate can mean a shortage of workers = higher wages
• A higher unemployment rate means a greater pool of workers to choose from – drives down wages
  BUT balance this with skill base of the labour force

Question 4

explain infrastructure

Answer 4

• does the country have adequate Road, Rail, Sea, Air transport systems to enable exports and imports?
• suitable buildings and premises where the goods could be manufactured?
• reliable power system?

Question 5

explain the location in a trading bloc

Answer 5

• Set up production within a trading bloc to:
• Avoids import tariffs/quotas as goods can be sold within the trading bloc
• Access to raw materials without tariffs as well
• Some businesses may start production in a country as a way into a trade bloc