How did the relocation of production by multinational corporations (MNCs) to low-wage Asian countries from the late 1970s onwards transform the world economy? Give reasons why countries like China became attractive destinations.
Generated by claude-sonnet-4-6 · 2026-06-26 14:58 · grounding rag
Model Answer
From the late 1970s, MNCs began shifting production to low-wage Asian countries. This relocation stimulated world trade and capital flows, and transformed the world's economic geography. Countries like India, China and Brazil underwent rapid economic transformation as a result.
China became an attractive destination because:
- Wages were relatively low, reducing production costs.
- MNCs competing to capture world markets found low-cost economies profitable.
- New economic policies in China opened it to foreign investment after years of isolation since its 1949 revolution.
This is reflected in the fact that most TVs, mobile phones and toys sold globally are manufactured in China due to its low-cost structure.
Source: Chapter 3, Section 4.4; Chapter 4
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Explanation
- The question has two parts — transformation of world economy AND reasons for China's attractiveness — address both.
- Key facts to include: late 1970s timeline, low wages, stimulated trade and capital flows, China's new economic policies post-revolution isolation.
- Examiners award marks for: (1) effect on world economy, (2) at least two specific reasons for China's attractiveness. Do not write a general essay on globalisation.
- The phrase "low-cost structure, most importantly its low wages" is directly from the textbook — use it.