Low-cost Countries Research Articles

The Manufacturing Reshoring Phenomenon: A Policy-Oriented Analysis of Factors Driving the Location Decision

For several decades, multinational enterprises (MNEs) have offshored their manufacturing activities to low-cost countries to achieve significant productivity gains. However, changes in the relative competitiveness of countries, social effects of deindustrialization in advanced economies and the vulnerability of global value chains (GVCs) revealed by the COVID-19 pandemic have encouraged some firms, supported by governments, to “reshore” part, or all of their offshore industrial operations back to their home country. Reshoring decisions are motivated by a variety of endogenous and exogenous factors that are empirically analyzed in this paper to understand how reshoring policies implemented by governments can more effectively address the factors driving the firms’ location decisions. A review of the reshoring policies implemented in Europe, the UK and the US is conducted to provide general policy recommendations regarding policy instruments, SMEs, innovation and regionalization of value chains. This paper fills a gap in the literature by connecting the micro-level supply chain management analysis of firms’ reshoring drivers with the macro-level economic policy perspective on reshoring. The review of existing reshoring policies calls for an in-depth analysis by the manufacturing sector and at the local level.

Future directions for emergency medical services development in low- and middle-income countries

The lack of prehospital care access in low- and middle-income countries is one of the greatest unmet needs and, therefore, one of the most urgent priorities in global health. Establishing emergency medical services in low- and middle-income countries poses significant challenges and complexities, requiring solutions tailored to prevailing conditions, informed by needs assessments, and adapted to meet local demands in a culturally appropriate and sustainable manner. In areas without existing emergency medical services, patients must rely on informal networks of untrained bystanders and community members to provide first aid and transport to definitive care. Since 2005, training lay first responders has been recommended by the World Health Organization as the first step toward formal emergency medical services development. However, efforts to formalize lay first responders networks have not expanded with the increasing need for prehospital emergency care in low- and middle-income countries, despite their potential. The rapid expansion of communication technologies like mobile smartphones penetrating resource-limited settings offers effective and inexpensive options for dispatching and coordinating lay first responders that were not previously available. These technologies can also be used for more advanced emergency medical services, obviating expensive communications and dispatch infrastructure. Despite disproportionately bearing the global injury burden, lay first responders frequently lack accurate and comprehensive surveillance data secondary to widespread underreporting, especially for non-fatal events. Lay first responders expand surveillance, which may inform future targeted prevention efforts, assisting in the development of tailored countermeasures suited to local hazards and diseases. Emergency medical services development in low- and middle-income countries involves a strategic approach focused on understanding the unique needs of diverse communities, requiring broad stakeholder involvement to create a sense of ownership to maintain volunteer networks and enhance sustainability. By embracing these relatively low-cost, bottom-up strategies, low- and middle-income countries can develop more accessible, efficient, and community-oriented emergency medical systems, ultimately improving public health outcomes and averting preventable deaths to address the emergency burden.

EU27 regional trade networks for medical products in fight against Covid-19 pandemic: Quantifying vulnerability and self sufficiency in critical inputs.

The Covid-19 pandemic spread fast due to a lack of vaccines and a severe shortage of medical products to treat and combat the disease. Many studies have focused on the characteristics of extant global supply chains and trade networks that are determined by globalization drives for production to low-cost countries and the technological complexity of products with many components distributed globally. This, along with the lockdown of many sectors and national policies that divert exports for domestic use, are reasons for lack of access, especially, in Western countries to these products. Governments adopted policies that aim to mitigate vulnerability to imports of critical medical products that include self-sufficiency measures such as increased domestic production, stockpiling and reduction of exports. However, there is as yet no quantitative way to assess if a country's vulnerability to critical imports has been reduced by such drives for self-sufficiency, when other countries in the trade network follow similar policies. For this we develop a Google PageRank style centrality measure based on the Markose-Giansante eigen-pair method for a specially constructed global bilateral trade network to assess the vulnerability of net importers of critical medical products when they attempt to mitigate it by regional or domestic buffers. We use the network vulnerability centrality measure to quantify the regional self-sufficiency for EU27 countries over 2019-2021 for four Covid-19 critical medical products, viz. facemasks, personal protective equipment, ventilators and hand sanitizers. Despite, growth in value and share of intra-EU regional trade in most of these products by 2021, some countries did not achieve the reduction of vulnerability centrality.

Digital Nomadism: Trends of European Labor Migration in Low-Cost Countries

Work activities are becoming increasingly mobile as a result of advancements in information technology. European productivity is changing to more flexible work approaches with internet processes. Many productive-age citizens from European countries with high living costs engage in digital nomadism activities. This research aims to explore the pull and push factors of the digital nomadism process and determine the motives for digital nomadism activities carried out by Europeans. Using netnography analysis tools and qualitative approaches, researchers are attempting to determine what factors influence and how European workers carry out digital nomadic activity patterns in Madeira, Portugal. As a result, researchers bring forth the descriptive outcomes of the analysis. In this article, researchers conclude that digital nomadism is a practice or, more accurately, a new way of life mostly practiced by remote workers with flexible work schedules. The idea of work-life balance is equally important to digital nomads. The growth of digital platforms that increasingly enable work to be done online drives the development of digital nomadism activities. This article will also go into greater detail on several pulls and push elements, as well as numerous issues about activities for digital nomads.

Linking production geography and financial performance

PurposeWhen is it more profitable for multinational manufacturers to manufacture in high-cost environments and when in low-cost environments? While the literature offers many cues to answer this question, too little empirical research directly addresses this. In this study, we quantitatively and empirically investigate the financial effect of companies' production footprint in low-cost and high-cost environments for different types of production networks.Design/methodology/approachUsing the data of 770 multinational manufacturing companies, we analyze the relationship between production footprints and profitability during four calendar semesters in 2018 and 2019 (N = 2,940), investigating the moderating role of companies' production network type.FindingsWe find that companies with networks distinguished by both high levels of product complexity and process sophistication profit the most from producing to a greater extent in high-cost countries. For these companies, shifting production to low-cost countries would be associated with negative performance implications.Practical implicationsOur findings suggest that the production geography of companies should be attuned to their network type, as defined by the companies' process sophistication and product complexity. Manufacturing in low-cost countries is not always the best choice, as doing so can adversely affect profits if the products are highly innovative and the production processes are complex.Originality/valueWe contribute to the scarce empirical literature on managing global production networks and provide a data-driven analysis that contributes to answering some of the enduring questions in this critical area.

Graph Spatio-Temporal networks for manufacturing sales forecast and prevention policies in pandemic era

Worldwide manufacturing industries are significantly affected by COVID-19 pandemic because of their production characteristics with low-cost country sourcing, globalization, and inventory level. To analyze the correlated time series, spatial–temporal model becomes more attractive, and the graph convolution network (GCN) is also commonly used to provide more information to the nodes and its neighbors in the graph. Recently, attention-adjusted graph spatio-temporal network (AGSTN) was proposed to address the problem of pre-defined graph in GCN by combining multi-graph convolution and attention adjustment to learn spatial and temporal correlations over time. However, AGSTN may show potential problem with limited small non-sensor data; particularly, convergence issue. This study proposes several variants of AGSTN and applies them to non-sensor data. We suggest data augmentation and regularization techniques such as edge selection, time series decomposition, prevention policies to improve AGSTN. An empirical study of worldwide manufacturing industries in pandemic era was conducted to validate the proposed variants. The results show that the proposed variants significantly improve the prediction performance at least around 20% on mean squared error (MSE) and convergence problem.

Offshoring or reshoring: the impact of tax regulations on operations strategies.

After decades of outsourcing to low-cost countries, companies are restructuring their production footprint globally. Especially having experienced supply chain disruption caused by the unprecedented Covid-19 pandemic for the past several years, many multinational companies are considering bringing their operations back home (i.e., reshoring). At the same time, the U.S. government proposes using tax penalties to motivate companies to reshore. In this paper, we study how a global supply chain adjusts its offshoring and reshoring production decisions under two different circumstances: (1) under traditional corporate tax regulations; (2) under the proposed tax penalty regulations. We analyze cost variants, tax structures, market access and production risks to identify conditions where global companies decide to bring manufacturing back to their domestic countries. Our results show that multinational companies would be more likely to relocate the production from the main foreign country to an alternative country that enjoys even lower production costs under the proposed tax penalty. As identified by our analysis and as well as numerical simulations, reshoring can only occur in rare situations such as when the production costs in the foreign countries are close to that in the domestic country. Besides potential national tax reform, we also discuss the impact of the Global Minimum Tax Rate proposed by the G7 on global companies' offshoring/reshoring decisions.

Qualitative exploration of the socioeconomic status and motivations of Chinese students in Hungary

Surprisingly little research has been conducted on Chinese students in Hungary, despite their growing number. Education has gradually become a crucial element in attaining higher socioeconomic status, so it is vital to understand such students’ socioeconomic backgrounds and motivation for studying in Central Eastern Europe. Applying cultural mobility theory, this article explores students’ family backgrounds and motivations for pursuing tertiary education in Hungary. Twenty-six narrative interviews were conducted and analysed using grounded theory method. The results indicate that three important factors influenced lower-middle-class Chinese students’ choices to study in Hungary: the constraints of reality, educational aspirations, and a desire for self-expression. Working-class or lower-middle-class families were required to make compromises for their children to study abroad because their financial means limited the opportunity for international study. Therefore, education in a relatively low-cost country like Hungary became an option. This research contributes to current theories of educational mobility by offering fresh understandings about students with a lower-middle class SES, the influx of working-class Chinese students into Hungary, as well as the relationship between upward social mobility and studying internationally. The recommendations for policymakers in China and Hungary made in this paper enable the development of practicable strategies for enhancing learning environments, producing positive educational outcomes, fostering equitable education systems, and ameliorating the impact of a lower SES background on educational and social mobility.

Deregulation and Financial Intermediation Cost: An International Comparison

AbstractCalculations for 15 countries reveal falling unit costs of financial intermediation in most cases, especially where unit cost was high during the 1970s. This result coincides with the concomitant convergence of both unit cost and the deregulation index over the period: Countries with a high unit cost were initially more strictly regulated and subsequently deregulated more. Despite this, the international unit cost barely declined due to the decreasing weight of low unit cost countries in total financial production after the mid‐1980s. Focusing on the specific effect of deregulation, the econometric analysis displays a negative and significant link between deregulation change and unit cost variation. Further analyses reveal that the effect of a change in deregulation depends on banks' market power. Thus, the stagnating unit cost observed in the United States and the United Kingdom, the two largest providers of financial services, could be due to weaker deregulation reforms—deregulation was already high in these countries during the 1980s—and a concomitant reduction in competition.

The pros and cons of reshoring to address the problems of shortages in global pharmaceutical value chains: the case of antibiotics

PurposeAntibiotics shortages have become an increasingly common problem in Europe because of several reasons, including the offshoring of the production of active pharmaceutical ingredients for many of these products to low production cost countries, such as China and India. The problem has deteriorated because of the Covid-19 crisis that has put most global value chains (GVCs) under great stress. This situation has boosted extensive discussions among academics, practitioners and policymakers on possible changes to the configuration of GVCs. This paper aims to focus specifically on antibiotics supply chains from the perspective of a small country (Sweden), and analyse the pros and cons of backshoring and nearshoring alternatives, as a means to reduce drug shortages.Design/methodology/approachThis work adopts a systemic perspective to capture the implications of reshoring for the different stakeholders involved in the antibiotics field. The present meso-analysis, focusing at the industry level, is based on multiple sources of primary data collected between 2014 and 2021, including participation in policy-related projects and interviews with over 100 representatives of key stakeholders in the antibiotics field.FindingsThis paper shows how reshoring can address the problems of drug shortages and reduce availability risk in antibiotics’ GVCs. However, the authors show that no simple and best solution exists because both alternatives of reshoring, i.e. backshoring and nearshoring, entail pros and cons for different stakeholders. The authors conclude with implications for policymakers and managers.Research limitations/implicationsThe analysis of pros and cons of both backshoring and nearshoring for various stakeholders offers relevant implications for research on operations and supply management, international business and economics/political science.Originality/valueThis paper looks at reshoring as a policy-driven decision and provides an innovative systemic perspective to analyse the implications for different stakeholders of two reshoring options concerning the antibiotics supply chain.

The Impact of Instability in the Business Environment on the Competitiveness of Enterprises Using the Example of the Apparel Industry

Recently, many disruptions have occurred in the environment of companies, mainly caused by the COVID-19 pandemic, but also, for example, by the war in Ukraine and by the sharp increase in fuel prices. The aim of the article was to present the competitive strategies of chosen companies from the garment industry and the impact of environmental instability on the competitiveness of enterprises using the example of the clothing industry in Poland. The author has been conducting comprehensive research in Polish clothing companies since mid-2017, using, first of all, the method of interviews with company management. This article presents partial results of these studies concerning the competitiveness of companies, especially in terms of the instability of the environment. On the basis of the conducted research, it can be concluded that the instability in the environment has a significant impact on the competitiveness of clothing enterprises. In the initial period, the COVID-19 pandemic had a negative impact on the level of logistic customer service. Because of this, availability of clothing in some stores and quality of deliveries to online customers deteriorated. The war in Ukraine also caused a temporary deterioration of the availability of clothing in the case of companies that outsourced production to Ukraine. Instability in the environment resulted in an increase in logistics and production costs, which in many cases resulted in an increase in the price of clothing for the end customer. The COVID-19 pandemic and the increase in fuel prices have reduced the efficiency of outsourcing clothing production in low-cost countries, but in the surveyed companies, this had not caused a shift of production from global to local. The problems resulting from the instability of the environment were more quickly overcome by those companies that were more flexible and that earlier on had diversified their sales channels (i.e., sold both in the stores and via e-commerce customers) and the sources of supply (production not only in low-cost countries but also in the local sewing factories). The research confirmed the significant impact of instability in the environment on the ability to compete with the level of logistic customer service and price. The instability in the environment did not affect the ability to compete with the quality of clothing in the surveyed companies.

Applying social media for studying challenges of COVID-19 for students

This conference paper contributes to understanding opportunities to use social media for identifying the priorities and challenges of students from different countries in online and face-to-face learning and networking activities during the COVID-19 pandemic. The COVID-19 crisis has resulted in more intensive online learning and hybrid learning applications in higher education. When there is a shift from a teacher-controlled class environment to a more learner-controlled social media, the role of the educator becomes more of a facilitator. The main research question in this paper is: How social media activities facilitated by instructors can support international learner-driven online networking and knowledge sharing during the COVID-19 pandemic? Our action research aim was to reveal learning preferences and networking challenges that students do not usually share in a class environment. Despite critics of Facebook and the increasing popularity of alternative social media among young people, Facebook groups offer tools for discourse between different age cohorts and conduct polls to assess alternative educational tools and COVID-19 administrative restrictions that influence student mobility and socialisation. To study the challenges of COVID-19 for students in online learning and in physical interaction, we applied netnography methods in combination with interventions by educators to study students’ preferences in the Facebook group Challenges in online learning – COVID-19. Among the most popular Facebook polls for students were questions about group work and exam arrangements during the pandemic and work from anywhere practice implications, cross-border mobility regulations during the COVID-19 pandemic and reasons why some students do not participate in web conferences using their computer cameras. Students shared the view that flexible online work from anywhere solutions will be for many organisations among trends that will remain after the COVID-19 crisis is over. Some students, both from Europe and developing countries, believed that this trend would improve job opportunities for the workforce living in low-cost countries. Facebook group enabled international knowledge sharing, where both students and educators could share their views on many issues that influence the rapidly changing online learning and networking environment.

The Impact of the COVID-19 Pandemic on Supply Chains in the Example of Polish Clothing Companies in the Context of Sustainable Development

The article presents the impact of the COVID-19 pandemic on the supply chains of Polish clothing companies. The aim of the article is to present the impact of the COVID-19 pandemic on the supply chains of Polish clothing companies, in both the short and long-term, and in the context of sustainable development. The author has been conducting research on logistics and production processes as well as supply chains of Polish clothing companies since 2017. The research results presented in this article on the impact of the pandemic on the functioning of supply chains in this sector of the economy were carried out in 2021. The author conducted telephone interviews with the management of Polish clothing companies of all sizes, both with distributors and producers. She identified disruptions in the supply chains caused by the pandemic (on the supply, production and distribution). She outlined the short-term actions of companies in response to disruptions, as well as long-term changes related to the logistics strategy as a result of the pandemic. The author also presented the ecological and social effects of changes in logistics strategies caused by the pandemic. So far, there has been no research in this industry and this area concerning not only the short-term impact of the pandemic, but also the strategic changes and their impact on sustainable development. Thus, it is a study that fills the existing research gap. The pandemic particularly affected the distribution of clothing, which caused the dynamic development of e-commerce. Because of this, some clothing companies have changed the organization of deliveries to online customers, such as the example presented by the author of the largest Polish clothing company, LPP S.A. The pandemic in apparel companies has also disrupted production and supply. This was especially true for deliveries from countries with low production costs. Despite these disruptions, however, no mass withdrawal from the production of clothing in low-cost countries to Poland has been observed and, according to the surveyed companies, this will not be a long-term consequence of the pandemic. However, if factors that occurred during a pandemic worsen, this could favor the shifting of more production from low-cost countries to local or regional sewing plants. This would enable the application of the Quick Response strategy. Other disruptions that occurred in connection with the pandemic include a reduction in the number of orders for Polish sewing factories, an increase in the prices of materials and packaging, an increase in transport costs and a periodic increase in inventory levels as a reaction of some companies to the disruptions. The disruptions also caused, in some cases, greater volatility in the relationship between individual links in the supply chains, which perhaps will be the next strategic change.

Navigating offshoring supply chain management decisions between cost advantages and corporate social responsibility risk

In the globalised world, companies would source major parts of their production, mainly for economic reasons, from low-cost countries. Therefore, it is important to understand implicit corporate social responsibility (CSR) risk when making offshoring decisions. This article presents a transparent composite index of CSR risk for a list of 170 countries. Combining the country CSR index with GDP per capita can help firms identify attractive offshoring destinations with relatively low CSR risk. This innovative approach allows companies to reconcile CSR considerations with economic success when designing international supply chains.

Supply Chain Management: Empirical Case Study of a Small-Scale Manufacturing Company in Nigeria

The supply chain of a manufacturing company can be classified into three categories namely: 1) supplier chain; these are a network of suppliers of raw materials, machinery, and other requirements for daily operations for the company; 2) internal chain; these are departmental or functional relationships within the organization like production, finance, marketing, logistic and quality control departments all interacting together to achieve the goals and objective of the company; and 3) customer chain; these are networks used for products distribution to the final consumer which includes the product distributors and retailers in the marketplace as may be applicable. In a developing country like Nigeria where government infrastructures are poor or in some cases none in existence, the survival of a small-scale manufacturing company often depends on how effectively its supply chain is managed. In Nigeria, suppliers of machinery and raw materials to most manufacturing companies are from low-cost but high-tech countries like China or India. The problem with the supply chain from these countries apart from the language barrier between these countries and Nigeria is also that of product quality and after-sales support services. The internal chain also requires funding to employ an experienced and trained workforce to deliver the company’s goals and objectives effectively and efficiently which is always a challenge for small scale manufacturers including product marketing. In Nigeria, the management of the supply chain by small scale manufacturers is further complicated by unfavourable government policies. This empirical research is a review and analysis of the supply chain management of a small-scale manufacturing company located in Lagos Nigeria. The company performance for the past five years has been on the decline and company management thinks there is a need for a review of its supply chain management for business survival. The company’s supply chain is analysed and compared with best global practices in this research and recommendations made to the company management. The research outcome justifies the company’s need for a strategic change in its supply chain management for business sustainability and provides a learning point to small-scale manufacturing companies from developing countries of Africa.

The Impact of the COVID-19 Pandemic on Global Sourcing of Medical Supplies

We provide evidence that the COVID-19 pandemic has incentivized U.S. firms to rebalance the trade-off between manufacturing cost efficiency and supply chain resilience in their sourcing decisions. Over the past few decades, companies have been outsourcing production to low-cost countries such as China in pursuit of cost-efficiency. However, the risk of supply chain disruptions has been receiving heightened attention recently, as countries strive to prioritize scarce resources for domestic needs during the global pandemic. Our research shows that while China’s supply chain has proved resilient, U.S. companies have increased their access to medical supplies through domestic production. As a result, COVID-19 has highlighted the importance of local capacity and changed the traditional perception of outsourcing from a purely economic efficiency focus to one emphasizing the need to balance risks in global exposures.

The Value Creation Determinants of the Global Software Engineering Industry

Every requirement in the software application does not add value to the end users equally where the stakeholders are benefited through them. Majority of the current software engineering practices are formed and done in a value neutral way. With the recent demand for the global software engineering, many organizations have decided to either initiate their own technology centers in the low-cost countries or to partner with outsourced companies to get the benefits of it. However, the practitioners tried applying the traditional software development processes without a proper customization of them to best suit for the distributed teams. Due to the nature of this industry, those traditional processes have further eroded the value with unnecessary checkpoints and gates. This research therefore was carried out to identify the value creation dimensions and their influence creating value with special reference the global software engineering industry. For that, a systematic literature review was carried out and findings were categorized to five areas based on the research questions. They are benefit realization in the delivery process, eliciting and reconciling the requirements for stakeholder value proposition, business case analysis against the business processes, assessment of the value, risk, and opportunity through the frameworks and finally value based monitoring and control through the software development methodology. Mapping the development processes against these areas can change the value addition on the global software engineering industry.

Central and Eastern Europe: An Invisible Sewing Shop

Abstract Developed countries started to outsource labour-intensive production processes to lower-cost countries decades ago such as the ones belonging to Central Eastern Europe, where subcontracting became significant from the 1950s. During the past few years, tendencies of relocation came to the fore and received a fresh boost because of the economic situation caused by the coronavirus pandemic. The growing need for shorter supply chains creates a noteworthy situation in the region’s fashion industry. But we have to make a difference between the ‘headquarter’ country of the brand and the actual country of origin: even if luxury products are made here, the relations in production remain hidden.

Harris Tweed: A glocal case study

Fast and effectively disposable fashion has seen clothing reduced to transient items, worn for a short period of time then discarded. This has pushed down prices, moving textile and clothing production to low-cost labour countries and decimating the traditional Scottish textile economy. Fast fashion drives consumer demand for newness and uses finite resources that are damaging to the environment. In 2019, the pressure to move towards a more sustainable fashion and textile industry is intense. Traditional textile manufacture using natural, renewable sources that are inherently long-lasting offers a slow fashion alternative, epitomized by the Harris Tweed handweaver community in Scotland. Fashion has embraced digital, with growing online sales and increasing focus on digital content. This presents an opportunity to redress the balance by using technology to shape a sustainable future for traditional textiles. Utilizing an interpretive paradigm and inductive approach, an Arts and Humanities Research Council (AHRC) funded networking grant is presented as a qualitative case study, investigating how immersive technologies can be used to safeguard the future of traditional textile products, to educate contemporary, global audiences on the provenance and human hand behind manufacturing processes and to encourage consumption of products with longevity. This explanatory case study finds that fashion brands are using immersive technologies for virtual changing rooms or creative customer experiences but are not exploiting the possibilities of immersive technologies in engendering a sense of place or people behind the product. Findings also reveal that the Harris Tweed Authority and Harris Tweed Hebrides brand successfully use landscape to convey a sense of place, but are under-utilizing the handwoven value and sustainable, slow fashion credentials of Harris Tweed. China is identified as a potential place for Harris Tweed to gain valuable market share, with increasingly wealthy Chinese Generation Z consumers seeking individual exclusivity and sustainability in their clothing purchases, criteria that embody Harris Tweed.

Managing the Offshoring of Audit Work: Spanning the Boundaries Between Onshore and Offshore Auditors

SUMMARYThe offshoring of external audit work to so-called low-cost countries is prevalent among the Big 4 professional services firms. Despite this, our understanding of how this form of offshoring influences audit practitioners and the audit process is limited. This study examines how and why offshoring emerged as an organizational matter that changed the way audit work is organized in a Big 4 firm context. Our findings demonstrate how changes in the design of offshoring processes influence interactions between onshore and offshore auditors. We uncover how individual “boundary spanners” struggle to coordinate audit work across the multiple boundaries that separate onshore and offshore auditors. Furthermore, we show how the institutionalization of “boundary spanning” functions in organizational structures and processes can have the unintended consequence of widening the boundaries between onshore and offshore auditors. Finally, we offer evidence of the effect of offshoring on the learning process of onshore and offshore auditors.