Question

how did the relocation of industries to low wage countries stimulate World Trade and capital flows

Answer 1

Relocation of industry to low wage countries stimulated world trade and capital flows due to following reasons:
(i) In the last two decades the world economic geography has been transformed as countries like China, India and Brazil have undergone rapid economic transformations.
(ii) Wages were relatively low in these countries. Thus, these became attractive destination for investment by foreign MNCs competing to capture world markets. The low cost structure of economy of China and low wages specially attracted them.
(iii) With failure of Soviet style communism and collapse of Soviet Union, many Eastern European countries were also integrated in the world economy.

Answer 2

Answer:

“The relocation of industry to low-wage stimulated world trade and capital flows. Justify the statement.  P- (CBSE-2015-home)   3

Ans. Relocation of industry to low wage countries stimulated world trade and capital flows due to following reasons:

(i) In the last two decades the world’s economic geography has undergone rapid economic transformation, example, cChina, India and Brazil.  

(ii) Wages were relatively low in these countries. Thus, these became attractive destination for investment by foreign MNCs competing to capture world markets. The low cost structure of economy of China and low wages specially attracted them.

(iii) The new economic policies of these countries have brought them back into the fold of the world economy.

Explanation: