Question

Over several decades, some industries, such as textile and clothing, which were once a significant part of the U.S. economy, have shifted manufacturing abroad. Using the idea of opportunity cost, provide an explanation of the reasoning behind this shift. How has this shift affected economic well-being locally? How do the gains compare to the losses?

Answer 1

We know that industries plays an important role in the development and growth of the economy. Through the success of industries it can shift manufacturing to other countries also. In U.S, industries like textile and clothing shifted its manufacturing abroad. There are many reasons for this shift. One reason is that in the modern world there are many companies were established which is producing same type of products. This will affect the profit of the companies. So companies will find other ways to increase their profit. People have somany choices infront of them. There is a cost for consuming a good, that is opportunity cost. Opportunity cost is the cost of the next best alternative for a product or a service. If a product is not liked by a consumer he can try other product with same characters. Like that industries try to enlarge their production to other countries. It will help them to gain profit. The interest an taste of the consumer will also change always. So it is necessary for the industries to change their location. They will try their product to new customers. If the demand for the product is high, the industry will shift the manufacturing to other countries. The cost of production will be low in developing countries than the developed countries. So through shifting industries the expenditure of the production can be decrease. Other costs like transportation cost, maintenance cost will also be low. The amount of salary to the employees will also less. New technologies can also be introduced with skilled labours in those industries who shifted their manufacturing in abroad.

The shift of manufacturing affected economic well being locally. It increased tghe employment opportunities in countries especially in local areas. Through the shift of manufacturing it resulted to the development and growth of the economy. It helped to increase infrastructure facilities like transportation and communication. It will increase the standard of living of the people.Both men and women will get a chance to earn income. Like that other facilities like quality education and health care facilities will also increase in the country.

The gains are more compare to the losses. Because the rate of profit of the industries increased due to the less cost of production. The revenue of the company also increased, because the management want to pay less salary in other countries than their home country. The demand and supply of the commodities also increased. Because due to the increased employment opportunities, people have enough money in their hands and they will buy more products. The introduction of modern technologies also helped to increase the production. As a result of the manufacturing, the industries began to gain profit.