soon the possible opportunity costs could encourage India to shift to more

Soon the possible opportunity costs could encourage

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soon, the possible opportunity costs could encourage India to shift to more productive, labor- intensive industries. If India also removes trade barriers – like high rental rates and high taxes – and bolsters internal businesses, they’ll see factor-price equalization begin to take place. With them currently being a labor-abundant country, FPE predicts that the cost of capital should fall, and the cost of labor should rise. The relative price of labor- intensive goods should increase as India competes in this equalized market. As labor costs rise, Stolper-Samuelson theorem says the increase in price should result in lower rental rates and greater return to the factor used, through increasing wages .
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