Question

Why are labor and capital immobile when it comes to international trade and multinational corporations?

Answer 1

Labour and capital mobility refers to the ability to move the factors of labour and capital of production . Mobility includes the transfer of factors with in a firm or with in a industry. Suppose a company has two business one is of automobile sector and second is of textile and a employee of textile now wants to quit the work in textile industry or sector and he wants to join any other sector or we say automobile sector and he transferred from the textile business to automobile business it is also a mobility . Mobility includes a transfer with in a country

Now in case of international trade or multinational corporations a company has a business in two or more countries so now the labour and capital is immobile because there are various problem arises such as of language problem and working method or Different culture problem and also various government regulations so it is not easy to work in another country and also various documents are also required to go to another country and also many paper work of laws or rules regarding of transfer money form one country to another country. Mostly workers wants to remain in their own national origin due to the reason of immigration restrictions and also various government control restricted movements of capital internationally. That's why labour and capital immobile in case of international trade and multinational corporations.