**MNCs choose to set up production in locations with cheap labour resources because of several reasons:**

**1. Cost advantages:** One of the primary reasons why MNCs choose to set up production in certain locations is to take advantage of cheap labour resources. By employing workers from countries with lower wage rates, MNCs can significantly reduce their production costs. This enables them to offer their products at competitive prices in the global market and maximize their profits.

**2. Availability of skilled workforce:** Many developing countries have a large pool of skilled and semi-skilled workers who are willing to work at lower wages compared to developed countries. MNCs often choose to set up production in these locations to tap into this skilled workforce and benefit from their expertise.

**3. Regulatory environment:** Some countries have business-friendly regulations and policies that attract MNCs to set up production there. These regulations may include incentives such as tax breaks, subsidies, or special economic zones that provide a favorable environment for multinational corporations. This encourages MNCs to establish their production facilities in these locations.

**4. Market access:** MNCs often consider the proximity of the production location to key markets. Setting up production in a country that is close to their target market can reduce transportation costs, shorten lead times, and enhance their responsiveness to customer demands. This strategic advantage makes it more cost-effective for MNCs to produce goods in locations closer to their target market.

**5. Infrastructure and logistics:** MNCs also consider the availability of infrastructure and logistics capabilities when deciding where to set up production. Access to reliable transportation networks, ports, and utilities is crucial for efficient production and distribution. Countries with well-developed infrastructure often attract MNCs as it allows them to streamline their operations and reduce costs.

**6. Political stability:** Political stability is an essential factor for MNCs when choosing a location for production. Countries with stable political environments and favorable investment climates are more likely to attract foreign investment. MNCs prefer to operate in countries where there is a low risk of political unrest, policy changes, or nationalization of assets.

**In conclusion, MNCs choose to set up production in locations with cheap labour resources because it offers them cost advantages, access to skilled workforce, favorable regulatory environments, market proximity, infrastructure support, and political stability. These factors collectively contribute to the overall competitiveness and profitability of the multinational corporations.