ABSTRACT
This chapter examines the motivation of United States (US) electronics companies in establishing plants in less-developed countries for the manufacture of products to be exported to the US It provides an analytical framework that may be useful in understanding why US electronics companies have established offshore plants and in assessing the implications of these plants for the nations involved. Several studies have shown that a foreign investment decision is the result of a multistage process involving many persons in a company and occurring over an extended time period. The offshore production decision process may be described in terms of three stages: the administrative readiness to consider offshore production, the measurement of the benefits, costs, and risks of offshore production, and the evolution of offshore production. It was hypothesized that several product characteristics would determine whether a given product is chosen for offshore manufacture. These are: labor intensity, skill requirements, shipping costs, tariffs, sales growth, and so on.
