Vietnam has emerged as a major manufacturing hub in Southeast Asia, boasting an average annual GDP growth rate of 6.2% over the last decade. The country benefits from a young demographic profile, with approximately 70% of the population under the age of 35, and competitive labor rates that remain roughly 50% lower than those in neighboring China. Additionally, Vietnam's active participation in international trade agreements, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA), offers highly favorable tariff conditions for exporters.
However, rapid industrialization has severely strained the nation's infrastructure. Port congestion, logistics bottlenecks, and occasional power shortages in northern industrial zones pose risks to supply chain reliability. Furthermore, businesses operating in the region report challenges with administrative bureaucracy, complex regulatory compliance, and a growing shortage of highly skilled technical professionals in specialized engineering fields.
Taking into account the economic data in Extract D and the strategic context of a multinational consumer electronics firm seeking expansion, do you recommend that the company should invest in establishing a new manufacturing plant in Vietnam? Justify your recommendation.
310 exam-style questions on AQA A Level Economics 2.6 The international economy (A-level only), covering 2.6.1 Globalisation, 2.6.2 Trade, 2.6.3 The balance of payments, 2.6.4 Exchange rate systems, and 2.6.5 Economic growth and development. Each one has a worked solution and a mark scheme showing where the marks go.