Comparative advantages
and the search for lower input costs have provided powerful
incentives to consider new locations for production. This enabled production costs
to be kept low for a wide array of manufacturing activities, notably because of a
“Chinese price” that became a frame of reference for labor intensive manufacturing
activities. Not only did this keep production costs low, but it greatly helped to offer
consumption at cheap thus attractive prices, thereby fuelling demand in countries
already facing serious trade deficits. Thus, the redistribution of production was a
very unequal process, while comparatively consumption at a global level remained
more stable.