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Difficulty: HardAdvances in Technology and Exchange

"The introduction of containerization has revolutionized the carriage of general cargo. The speed of transit, the reduction of damage and pilferage, and the savings in packing costs have all contributed to a significant reduction in total transport costs. However, containerization requires heavy capital investment in specialized ships, containers, port facilities, and inland transport networks. For developing countries, this poses severe financial challenges, potentially widening the economic gap between developed and developing nations as trade increasingly concentrates in highly automated ports."

— United Nations Conference on Trade and Development, report on containerization, 1970

The technological shift described in the passage most directly contributed to which of the following global economic developments in the late twentieth century?

  1. The expansion of global supply chains and the relocation of manufacturing to developing economiesAnswer
  2. B
    The complete homogenization of global consumer habits and the elimination of local cultural identities
  3. C
    The initial transition from coal-powered steam engines to petroleum-fueled transport systems during the First Industrial Revolution
  4. D
    The re-establishment of direct colonial rule by Western powers to control foreign port facilities

Answer

The expansion of global supply chains and the relocation of manufacturing to developing economies
The correct answer is correct because containerization drastically reduced transport costs and loading times, which enabled multinational corporations to establish global supply chains. This allowed them to outsource and offshore manufacturing to developing countries with lower labor costs while maintaining design and management in developed economies.

Step-by-Step Solution

1
Analyze the stimulus passage.
The passage describes containerization as a technology that lowers transport costs and speeds up transit but requires high capital investment and automation.
Understanding the core technology and its economic implications is necessary to evaluate its historical impact.
2
Connect the reduction of transport costs to late-twentieth-century economic trends.
Lower transport costs made it economically viable for multinational corporations to outsource manufacturing to regions with lower labor costs, as shipping parts and finished goods back and forth became cheap.
Low-cost shipping is the foundational infrastructure for the modern international division of labor and global supply chains.
3
Evaluate the options against this historical connection.
The option describing global supply chains and manufacturing relocation matches this trend, while other options either represent misconceptions about globalization or conflate different historical eras.
Selecting the option that historically corresponds to the effects of containerization identifies the correct answer.

Key Concept

The role of transportation and communication technologies in facilitating globalization and the international division of labor.
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