A decision to move production factors from one country to another would be:
A) unaffected by currency and political stability.
B) made cooperatively by subsidiary managers.
C) based on tax, labor supply, and market conditions.
D) rejected by managers of the host country receiving the new activity.

Question

Quizplus · Accepted Answer

An IC may decide to move factors of production from one country to another, or to expand in one country instead of another. In addition to the cost, availability, and skill levels of labor, other possible reasons for such a move include corporate tax rates, market conditions, currency fluctuation, and political instability. It is understandable that the subsidiary from which factors are being taken will be unenthusiastic about giving up control over existing activities, and its management slow, at best, to cut capacity or to downsize or eliminate local operations. Headquarters will typically have to make such decisions.

A Decision to Move Production Factors from One Country to Another