Consider MNCs that produce products in the United States and export the products to developing countries. The MNCs could reduce their exposure to exchange rate risk if they set up their operations in the countries to which they export. Such a restructuring would cause a shift in expenses to the developing countries, and those expenses could be paid for with revenue earned in the same currency. Explain the practical limitations of this solution, which can help to explain why some MNCs do not pursue this strategy.

As you are researching and explaining your response be sure to talk about how the U.S. companies are always in search of cheaper labor in which companies leave the U.S. and go to other countries. We know cheaper labor saves the company money but how are they losing money in other ways by trying to get cheaper labor?