Economics of Textile Production J M Bailey 2006

Processing Costs in the Three Different Countries

Cost of Ring-Spun Yarns

Adding Open-End Spun Yarns

Study on Textile Production … Spinning

Study on Textile Production … Weaving

Q1 -Explain how the institutional factors of production of a country can affect the decision- making process in a foreign multinational company when it is considering the establishment of a manufacturing facility. Use Institutional Factors List Capital Management sharing schemes Who controls the company, locally and strategically? Capital interest rates What are the lowest rates, are these available locally? Structure of Capital Markets What do the local money markets operate, are there any locally? Etc. NOTE - Explain and Affect

How do each of these factors - plus any other factors you consider relevant - affect the company? ---- Build this into your explanations of the factors. For example – consider each section in turn…… Management sharing schemes Who controls the company, locally and strategically? Do you have to operate in share management? Discuss who might control the company operations, strategy, finance, local management - is it ex-patriot or local, who makes final decision, is it government or local company (in case of a joint venture). Is the partner looking for profits, jobs, high profile, more investment etc.?

Local infrastructure Are there sufficient roads, railways & airports? Does the company need this? If so why? Access for staff, components, materials, customers, goods out etc. Does company need airports, are road & rail sufficient? Can they use waterways, is the product time dependent? Can labour get to work? And so on. This is a straight-forward question - BUT you need to follow the instructions.

Q.2 A small east African state has a small foreign debt problem, but the major problem in the country is one of unemployment and underemployment. The country is relatively fertile although large sections of the population are under-nourished. The country is an exporter of a medium quality cotton, and has no real manufacturing industry. The majority of the working population, therefore, work on the land. The agricultural system is relatively primitive. It has been suggested that the government establishes a textile industry within the country, to help to solve some of their problems. Describe how the establishment of a textile production plant might benefit the country, and explain any possible disadvantages This is a more interesting question - you would need to pick information from a number of areas within the course and add a reasonable amount of common sense.

Possible Benefits – EXPLAIN EACH Increased employment - men, women etc. Better employment prospects Reduced debt Improved balance of payments - why & how Further investment Satisfied population More centralised population - why Export Production Zone - effects? Government income from taxes and duties

Possible Disadvantages Increased split of population Worsened balance of payments - why & how More centralised population - why Imported labour Increased expectations of population - goods & money No income from taxes from company - why Draw population from land Shanty towns etc.