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Econ Glob. Make up assignment.

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Department
Economics
Course
ECO2121
Professor
Prakash Sharma
Semester
Winter

Description
ECONOMICS OF GLOBALIZATION ECO2121 B WINTER 2014 Bonus 1 Mark Assignment Due March 10 in Class 7 p.m.: LabourandCapitalMobility Table of Contents Topic: Movement of Labour and Capital between Countries ...............................................1 Topic: Foreign Direct Investment (FDI)....................................................................................2 *** Topic: Movement of Labour and Capital between Countries 1. Why might a labour group support limitations on the outflow of FDI? 2. For some countries remittances account for a larger source of income than foreign aid. Should these countries have policies to encourage emigration? Explain? 3. Assume that Mexico receives an inflow of FDI. Suppose two factors (labour and capital) are used in the production in two industries (food and televisions). Further assume that televisions are capital-intensive as compared with food. Use the long-run specific-factors model to answer the following questions. 2 a. Show the impact of the inflow of FDI on Mexico in a diagram with output of food (televisions) on the vertical (horizontal) axis. What happens to the output of each good? b. How has wage changed in terms of food and televisions? 4. Suppose a country has two specific factors, land and capital. Land is an input in the production of corn. Capital is used only in the production of rockets. A third factor, labour, is mobile between the two sectors. Holding all else constant, what is the effect of an increase in the amount of available capital? a. On the real return on capital? b. On the real return of the mobile factor of production? c. On the output of corn and rockets? 5. Consider a long-run model for a country producing two products (digital cameras and baskets) using two factors (capital and labour). a. Which good would you expect to be capital-intensive? Which good would you expect to be labour-intensive? Why? b. Suppose that foreign owners of domestic ca
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