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- Title
GLOBAL ALLOCATION OF PRODUCTION SEEN IN A DYNAMIC PERSPECTIVE.
- Authors
Lüthje, Teit
- Abstract
The study provides an understanding of how the advantages of locating production in a global context change over time. Initially, the author of this study clarifies the conditions that must be fulfilled before a company locates production in other countries by elaborating on Dunning's eclectic paradigm, the so-called OLI-model. In continuation of this, we clarify and discuss different strategies for locating production in a global context, and that the choice of globalization strategy may affect the choice of location. The key message of the study is how the advantages of locating production in a global context changes with the countries' economic development and how the main motive of locating production becomes proximity to the market and/or drawing on knowledge. These arguments can be more important than wage differences and therefore a location may be chosen even though wages are higher than in other countries. Furthermore, we clarify how cost savings seen in a dynamic perspective affect the choice of relocating production from one country to another country. Finally, the economic development in China and Africa is used as illustrative cases.
- Publication
International Journal of Business & Economics Perspectives, 2017, Vol 12, Issue 1, p17
- ISSN
1931-907X
- Publication type
Academic Journal