Intuitively explain how migration of capital (FDI) can lead to economy-wide gains for both Home and Foreign. You may want to use a graph of a capital market, with rental rate curves (=marginal product of capital) for both Home and Foreign, and comparing a pre-FDI situation and a free-FDI equilibrium.
Intuitively explain how migration of capital (FDI) can lead to economy-wide gains for both Home and Foreign. You may want to use a graph of a capital market, with rental rate curves (=marginal product of capital) for both Home and Foreign, and comparing a pre-FDI situation and a free-FDI equilibrium.
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Intuitively explain how migration of capital (FDI) can lead to economy-wide gains for both Home and Foreign.
You may want to use a graph of a capital market, with rental rate curves (=marginal product of capital) for both Home and Foreign, and comparing a pre-FDI situation and a free-FDI equilibrium.
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