Question

Discuss the advantages and disadvantages to locating manfacturing, assembly, or distribution facilities in countires with relatively low wages.

Answer 1

Ans 1. Following all the advantages of locating manufacturing, assembly, or distribution facilities in countries with relatively low wages.

• The main advantage is low-cost structure production of the commodity in the country because of the low wage rate and it increases the massive production in the economy which enhances the productivity efficiency and effectiveness of the industries.
• Next, the main advantage is that it increases the export of goods to the other country because of surplus production and it is easy to produce more goods with the help of the limited resources.
• Another advantage is to compete with the global competition if the production capacity in the country is on the basis of the low cost of production due to low wage rate.
• it increases the employment opportunity in the economy due to the massive production with the help of the optimum utilisation of the resources under the low wage structure.

Disadvantages of locating manufacturing assembly or distribution facility in countries with relatively low wages are as follows:

• Due to the low wage rate, it is the possibility that the quality of work may be missing because the highly efficient employees work on the high wage rate.
• Sometimes the quality of production suffers due to the insufficiency of the quality workforce and in this case, the competitive firms supersede the market on the basis of their efficiency.
• Another big disadvantage is that the capital intensive techniques will suffer if there is a low wage rate because in this case organisation or doing their work on the basis of labour-intensive techniques and on the basis of this technique the highly innovative and technical work may suffer.