Understanding Economic Geography and Location Over Time
Chapter 24: Transnational corporations and international economic integration
Domestic markets in most countries are so small that even a high degree of protection of growth-propelling manufacturing industries and services aimed at supplying the local market may not be viable in terms of efficient employment of resources. By supplying a larger market provided by the integration arrangement, participating countries may increase production, capacity utilisation, employment and investment; reduce vulnerability to external shocks; capture economies of scale; improve bargaining positions in international markets; and increase average standards of living. Larger markets may often be an important attractive motive for TNCs to locate in the group.
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