Logic of the heckscher-ohlin model, International Economics

Assignment Help:

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.


Related Discussions:- Logic of the heckscher-ohlin model

Explain u.s and european foriegn exchange flow chart, Us and European Forie...

Us and European Foriegn Exchange Flow chart Answer: The figure explicate how the money markets of two countries are linked through the foreign exchange market. The financial

Dev Planning and Project Eva, 1. Species that have reached the extinction t...

1. Species that have reached the extinction threshold and are on the verge of extinction – beluga whales, African elephants, mountain gorillas and the California condor might be cl

Welfare effects of tariff, Welfare Effects of Tariff can be understood as f...

Welfare Effects of Tariff can be understood as follows: It is important to understand what the welfare effects for the tariff are. While a tariff might seem desirable because i

Discuss the effects of a change in u.s. expected inflation, Q. To answer th...

Q. To answer the following question, please refer to the figure below. Concentrating only at the lower right quadrant, discuss the effects of a change in U.S. expected inflation.

Reciprocal demand, Illustration of reciprocal demand through example

Illustration of reciprocal demand through example

What are the main aspects of economic life, Q. What are the main points of...

Q. What are the main points of economic life that macroeconomics analysis is most concerned with? Answer: There are four major aspects that are saving, unemployment, trade imb

International capital mobility, International Capital Mobility is explained...

International Capital Mobility is explained below: The case for the international capital mobility was most evidently articulated by MacDougal in 1960. He presented a framework

Relative factor abundance, Q. "No country is abundant in everything." Disc...

Q. "No country is abundant in everything." Discuss. Answer: the idea of relative (country) factor abundance is (like factor intensities) a relative concept. When we recogniz

Explain the specific objectives of fiscal incentives, Question: (a) ...

Question: (a) Illustrate the differences between inter and intra industry trade. (b) Foreign Investors generally tend to adopt a two-stage process when evaluating count

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd