Question

In: Economics

If I am a low-skilled worker in a labor intensive, capitally high country(rich), would I prefer...

If I am a low-skilled worker in a labor intensive, capitally high country(rich), would I prefer direct foreign investment or portfolio investment as policy?

Can you please elaborate why?

Solutions

Expert Solution

Foreign direct investment and portfolio investment are two different types of policies in which one can invest. There exist a difference between these two types of policies. The individual who is interested in the policies of some other country and wants to invest in that country prefer foreign direct investment. Portfolio investment is usually preferred by those who want the returns from their investment within a short period of time.
The low skilled workers of a labour intensive and rich country usually prefer portfolio investments over foreign direct investment as people living in a capitally high country don’t need to invest in some other country for ownership as the policies of their country for owning any property or asset would be better than any other country.
Also, foreign direct investment requires more knowledge to invest than in portfolio investment which will be difficult for a low skilled worker to understand.

Rahul Sunny answered 2 years ago
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