8. Illustrate the following – Country A imports capital intensive good Y (Y axis) and exports...

8. Illustrate the following – Country A imports capital intensive good Y (Y axis) and exports labor intensive good X (X axis) since this country is labor abundant. Now there is a huge influx of cheap labor into this country making the production of the labor intensive good very efficient. Clearly show the Rybcynzki effect and the immiserizing impact of growth in this large supplier of good X ! 9. Given a small country, compare the impact of “balanced” (growth in both capital and labor) vs. “unbalanced” growth (growth in capital only) if this country is exporting good Y where Y is capital intensive and country is capital abundant! Draw two clear diagrams. How are the two growth impacts slightly different! Explain!

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Rahul Sunny answered 1 year ago

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