International Trade Assessment
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1. The movement of capital and labor generates overall gains for both the source and host countries. In what ways does this happen?
2. What does foreign direct investment (FDI) really mean?
3. Explain differentiated goods and how you understand it in the context of monopolistic competition. In other words, why do countries trade so many different variations of, by definition, the same product?
4. Please explain the gravity equation and what do we really apply it to?
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Solution Summary
International trade assessments are examined. The foreign direct investments are analyzed.
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1. How the movement of capital and labor generates overall gains for both the source and host countries occurs.
The movement of capital and labor is characterized by migration wherein migrants immigrate from a foreign country to the "home" country. Wages that will be paid to migrant laborers as well as the rentals paid to capital and land are placated upon the prices of goods that are purchased, which generates overall gains for the source and host countries. The world market dictates the prices that will be appropriated toward goods, and in regard to the movement of capital and labor, industries are able to share extra workers when their is an influx of migrants but the fixed amounts of capital and land remain unchanged. The shared gains are a result of the wage declines to laborers, which enables companies ...
Education
- BS, Sam Houston State University, 1903 University Avenue, Huntsville, Tx 77340
- MS, Prairie View A&M University
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