Logic of the heckscher-ohlin model, International Economics

Q. Suppose Australia, a land (K)-abundant country and Sri-Lanka, a labor(L)- abundant country both produce labor and land intensive goods with the similar technology. Following the logic of the Heckscher-Ohlin model, what will be the incentive for migration once trade is taken between these two countries?

Answer: Once trade is set up there is no longer any incentive for economic-based immigration since the actual wages will be equalized in both. If a tariff is set up in Australia after that the price of the labour intensive good will be higher in Australia as will be the marginal product of labour and therefore the real wage of workers there. Therefore workers will immigrate from Sri-Lanka to Australia until the two domestic prices are equalized.

Posted Date: 6/25/2013 1:41:21 AM | Location : United States







Related Discussions:- Logic of the heckscher-ohlin model, Assignment Help, Ask Question on Logic of the heckscher-ohlin model, Get Answer, Expert's Help, Logic of the heckscher-ohlin model Discussions

Write discussion on Logic of the heckscher-ohlin model
Your posts are moderated
Related Questions
ln?(?FDI?_t )=ln??(C)+? ln?(?CNGDP?_t )+ßln?(?GDP?_t ?)+a ln?(DIST)+fCAFTA+?_(1 ) ln?(?EXPORT?_t )+?_2 ln?(?GDPM?_t )+?_3 ln?(?CPI?_t )+?_4 ln?(?GDPA?_t )+e

what are the criticisms of OPPORTUNITY COST THEORY of international trade propounded by PROF.HABERLER and OHLIN

Q. Discusses the effects of a rise in the interest rate paid by euro deposits on the exchanger rate.   Answer: For a known U.S. interest rate and a given expectation wi

Q. What is the real exchange rate between the dollar and the euro equal to? Answer: Let actual dollar/euro exchange rate q$/ENominal exchange rate E$/EPrice of an unchan

Q. How were the initial members of EMU chosen? How will new members be admitted? What is the structure of the complex of financial and political institutions that govern economic

TERMS OF TRADE MEANING AND NET BARTER TERMS OF TRADE MEANING TABLE DIAGRAM

Discuss the effects of ongoing inflation based on the PPP theory. Answer:  Other things equivalent money supply growth at a constant rate eventually results in ongoing price le

Q. Write about the assumptions of the theory of consumer behavior based on the cardinal utility approach. 1. Rationality- It is assumed that the consumer is a rational being in

critically examine the effects of tariffs on the level of employment and income distribution.