The Quandary of Foreign Manufacturing Affiliates in Less-Developed Countries

by Abel El Sherbini



This article focuses on the emergence of development programs and the rapid growth of public sectors. Many American and European manufacturing affiliates operating in less-developed countries are presently facing a dilemma. For the most part, this has come about as a result of violent environmental changes which few firms had anticipated at the time of their establishment. Historically, these manufacturing affiliates have operated in less-developed areas for a variety of reasons. Some firms have specialized in the transformation of imported semi-manufactures into goods needed by final demands. This has enabled such firms to dampen the effect of high tariffs and to secure a price advantage over imports of fully manufactured goods. Another group of manufacturing affiliates operating in such areas has engaged in the conversion of domestic, and sometimes imported, primary products into goods needed by final demands. The low cost of primary material and labor plus the occasionally sizeable consumer markets have been the essential factors in attracting this type of firm.

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