ch07 International Factor Movements 克鲁格曼国际经济学第六版英文教学文稿.pptVIP

* Chapter 7 International Factor Movements Prepared by Iordanis Petsas To Accompany International Economics: Theory and Policy, Sixth Edition by Paul R. Krugman and Maurice Obstfeld Introduction International Labor Mobility International Borrowing and Lending Direct Foreign Investment and Multinational Firms Summary Appendix: More on Intertemporal Trade Chapter Organization Introduction Movement of goods and services is one form of international integration. Another form of integration is international movements of factors of production (factor movements). Factor movements include: Labor migration Transfer of capital via international borrowing and lending International linkages involved in the formation of multinational corporations A One-Good Model Without Factor Mobility Assumptions of the model: There are two countries (Home and Foreign). There are two factors of production: Land (T) and Labor (L). Both countries produce only one good (refer to it as “output”). Both countries have the same technology but different overall land-labor ratios. Home is the labor-abundant country and Foreign is the land-abundant country. Perfect competition prevails in all markets. International Labor Mobility International Labor Mobility Labor, L Output, Q Q (T, L) Figure 7-1: An Economy’s Production Function L2 International Labor Mobility Figure 7-3: Causes and Effects of International Labor Mobility MPL MPL MPL* MPL* Home employment O Foreign employment O* A B C L1 Migration of labor from Home to Foreign Total world labor force Marginal product of labor The redistribution of the world’s labor force: Leads to a convergence of real wage rates Increases the world’s output as a whole Leaves some groups worse off Extending the Analysis Modifying the model by adding some complications: Suppose the countries produce two goods, one labor- intensive and one land-intensive. Trade offers an alternative to factor mobility: Home can export labor and import land by exporting the labor