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Advancements in communications and logistics have rendered geographical distance between markets a relatively straightforward problem to overcome. This is demonstrated all over the world by the automobile industry. It is these advancements that have enabled big businesses, particularly those who manufacture tangible goods such as apparel and electronics, to shift certain operations to countries where labour costs less.
Although there is evidence to suggest that average productivity of workers in the global manufacturing industry increases with the cost of labour, (Rodrik, 1997) it is a reality that low-skilled workers in a developing country can produce identical products to low skilled workers in high-income countries at a fraction of the cost, even after transportation costs have been accounted for...
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