Of course you can still locate your factories in country a, if the wage levels
were equal to that of country b on a productivity adjusted basis.
However over time, this country a is able to attract more and
more high tech production from the developing world.
Wages in that country are likely to rise a level, which make country b a more
favorable destination, for the production of goods that require much less skill.
[MUSIC]
Now before leaving this topic of offshoring production,
it maybe useful to comment briefly on its ethical dimensions.
The big issue here focuses on the exploitation of labor and
the use of sweat shops in developing country.
This is a problem endemic in the world, and a big reason why corporate
ethics courses should, but often are not, required in business school.