Factors Attracting MNCs to Low-Income Countries for Production

Steps:

• Identify key attractions for MNCs: low costs, market potential, and growth opportunities in low-income settings.
• Evaluate options against MNC goals like cost reduction and expansion in emerging markets.
• Eliminate choices with barriers like limited skills or strict regulations.
• Select the option combining growth and labor advantages for smartphone manufacturing.

Why A is correct:

• High economic growth signals expanding markets and future demand, while cheap labor lowers production costs, aligning with FDI theory that MNCs seek locations for efficiency and market access.

Why the others are wrong:

• B: Limited skilled workers hinder high-tech smartphone assembly requiring expertise.
• C: Low corporation tax helps, but lacks market growth incentive for expansion.
• D: Strict laws and high duties increase operational barriers and costs.

Final answer: A