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19 International Factor Movements, 1

19 International Factor Movements, 1 - International Factor...

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1 1 International Factor Movements, 1 • Introduction International Labor Mobility – A One-Good Model without Labor Mobility – A One-Good Model with Labor Mobility – Effects of International Labor Mobility – Extending the Analysis 2 Introduction International trade involves the causes and effects of the international exchange of goods and services. International factor movements involves: – Labor migration and/or – The transfer of international capital. 3 Introduction There is a fundamental economic similarity between trade and factor movements. – A labor-abundant country may under some circumstances import capital-intensive goods; under other circumstances it may acquire capital by borrowing abroad. – A capital-abundant country may import labor- intensive goods or begin employing migrant workers. 4 A One-Good Model without Labor Mobility Assumptions: 1. Two countries: Home and Foreign.
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