What is meant by interlinking production across countries?
MNCs are exerting a strong influence on production at distant locations. As a result, production in these widely dispersed locations is getting interlinked.
MNCs look into 4 major criteria before they set up production in any place.
1. The factory or company should be close to the markets.
2. Skilled and unskilled labour should be available at low costs.
3. Availability of other factors of production should be assured. (eg. Infrastructure)
4. Local Government policies should be in their interests.
When the above conditions are to their satisfaction MNCs set up factories and offices for production in different countries thus interlinking production across countries.
At times, MNCs set up production jointly with some of the local companies in other countries . Then the local company benefits in 2 ways from this joint venture. Money for additional investments, like buying new machines and the introduction of the latest technology for production is available to the local producer thus interlinking production across countries.
What are the various ways in which MNCs set up, or control, production in other countries?
How has liberalisation of trade and investment policies helped the globalisation process?
What was the reasons for putting barriers to foreign trade and foreign investment by the Indian government? Why did it wish to remove these barriers?
Why do developed countries want developing countries to liberalise their trade and investment? What do you think should the developing countries demand in return?
How does foreign trade lead to integration of markets across countries? Explain with an example other than those given here.