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Delocalization: Advantages, inconveniences and consequences

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  1. Main definition and introduction
  2. Advantages
    1. For home country
    2. For host country
  3. Inconveniences: Delocalization can have harmful effects on economy
    1. For home country
    2. For host country
  4. A delocalization example: European delocalization of services
  5. Recent trend
  6. Conclusion
  7. Glossary
  8. References

Economic delocalization is a transfer of activities, of capital and of employment in areas of a country or of the world which have competitive advantages. Delocalization consists of separating fabrication areas and transformation products areas of consummation country. The production is delocalized in other countries and thus the phenomenon of delocalization offers employment to foreign people. That is why increase of unemployment in developed countries is explained by delocalization. Entrepreneurs produce where it is cheaper and sell where there is purchasing power. If the delocalization phenomenon is very old ? companies began this movement in the 60s- it developed in the 90s thanks to the decrease of transport costs, the improvement of communication techniques and market globalization.

[...] In some host countries it seems to be advantageous to receive new ways to produce because people can learn new methods and in the future develop it for their companies. Moreover, some companies offer formation for local population. III. Inconveniences: delocalization can have harmful effects on economy However, for both, potential negative effects need to be taken into account. For home country Increases unemployment In developed countries, delocalization introduces controversy. Indeed, globalization is one of the causes of a bad economical conjuncture. [...]

[...] Opportunity to implant new markets Setting up a company abroad provides possibilities to implant new markets, to know better population needs and in consequence to obtain more sales in the host country. Indeed, it is a way to develop new products and to obtain more gains. It is a gage of development of the company. On the other hand, presence in important markets offers the possibility to avoid tariff- jumping such as exportations legislations, taxations, etc. A way to respond to consumers' needs The development of delocalization can be explained by consumers' preoccupations. [...]

[...] The children did not have any income, worked in bad conditions and were victims of corporal punishments. The company published an article to declare her ignorance. Indeed, the director said that he did not know these issues. It was not the first time that the company Gap had problems with accusations of child labor and it is not the only company that takes advantage of children's work in countries where there is no legislation against it. Increased dependence on imports When companies come to developing countries, they provide jobs for local population and so, an increased purchasing power. [...]

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