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What are examples of incentives that newly industrializing countries have to attract transnational corporations to offer production contracts

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Final answer:

Newly industrializing countries attract transnational corporations through policies that support innovative companies, provide access to inexpensive labor, and offer subsidies and protection for infant industries.

Step-by-step explanation:

Newly industrializing countries use various incentives to attract transnational corporations to offer production contracts. These may include:

  • Policies supporting innovative companies who wish to build production facilities.
  • Access to abundant and inexpensive human capital.
  • Freedom for market forces in both domestic economies and global markets, as seen in China and India.
  • Offering indirect and direct subsidies, protection from competition, and favorable government loans to nurture infant industries.
  • Seeking out applicable technology by sending students and commissions abroad to observe efficient industrial operations.

These methods aim to leverage local advantages, such as cheaper labor costs, while providing a supportive business environment to build competitive industries like steel and auto manufacturing, akin to the success stories in Japan and Korea.

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