Question

Suppose that you are the executive manager of the manufacturing team for a clothing company that is located in the U.S. Your company is interested in expanding its international activities by producing two new products; jackets and sweaters. It considers two countries; China and/or Italy. China has 1200 units of labor available. It can produce two goods, jackets and sweaters. The unit labor requirement in jacket production is 3, while in sweater production it is 2. Italy has a labor force of 800. Italy’s unit labor requirement in jacket production is 5, while in sweater production it is 1.

a) Suppose now that you have to convince the Chinese government that your business will benefit their country. How would you prove this? (Hint: You can use a graph to support your answer).

b) Suppose now that you have to convince the Italian government that your business will benefit their country. How would you prove this? (Hint: You can use a graph to support your answer).

Answer 1

Answer:- TheProuction of two goods Jackets & Sweaters in the said two contries i.e. China and/or Italy will benefit the country in which the production takes place along with U.S.The benefits of prouction in the said countries can be explained to their respective government in the following manner:-

A. Convincing the CHinese Government:- The chinese government can be convinced on the foll Points:-

i ) Employment :Being the world's largest populated country(China) if The U.S. chooses China as its destination for Production, a lot of people are going to get benefit of employment.

ii) Foreign Direct Investment(FDI) :The U.S. is directly investing into CHina which will help China to reap benefits of captial investement with the help of which the economy of China will grow further.

iii) Economic Development: Both the countries are going to benefit in monetary terms. The Output will grow and therby the GDP of the country will see a upward graph.

B. Convincing the Italian Government :-The Italian government can be convinced on the foll.points:-

i) Capital Instensive country:Italy Being a capital intensive country , with least labour and advanced machinery the production can be done in less time.

ii)Economic Growth & Development :- Partnering with Italy, both the countries can benefit in terms of Finances, economic growth and thereby economic development in the long-run.