Differences between the labor-intensive apparel and footwear industries

(1)(a). If there are internal economies of scale, why would it ever make sense for a firm to produce the same good in more than one production facility? [1 page; 30 points].

2(b). Most firms in the apparel and footwear industries (labor-intensive) choose to outsource production to countries where labor is abundant (primarily, Southeast Asia and the Caribbean) – but those firms do not integrate with their suppliers there. On the other hand, firms in many capital-intensive industries choose to integrate with their suppliers.

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What could be some differences between the labor-intensive apparel and footwear industries on the one hand and capital-intensive industries on the other hand that would explain these choices? [3/4 page; 20 points].

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