FINANCE-Some MNCs establish a manufacturing facility

Some MNCs establish a manufacturing facility where there is a
relatively low cost of labor. Yet, they sometimes close the facility later
because the cost advantage dissipates. Why do you think the relative cost
advantage of these countries is reduced over time? (Ignore possible exchange
rate effects.)

Offer your opinion on why economies of
some less developed countries with strict restrictions on international trade
and FDI are somewhat independent from economies of other countries. Why would
MNCs desire to enter such countries? If these countries relaxed their
restrictions, would their economies continue to be independent of other
economies? Explain.

 

 

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