Question

President Trump passed an executive bill, banning Chinese airplanes from landing in America, and Chinese Post Graduate students from studying in America. As Chinese tourists and students contribute greatly to the US economy, how do you think this law by President trump will affect US productivity and economic growth? Comment particularly on human capital, physical capital, technology, natural resources, and labour

Answer 1

The given case deals with a stuation of US blockade on Chinese airplanes from landing in America and their Postgraduates from studying in America. This particular act by America is expected to have effects on the areas like human capital, physical capital, technology, natural resources and labour.

When the Chinese planes are being blocked, it would mean that there would be less foreign exchanges as most of the foreign transactions are taking place through the means of air transport. The blockade of the education of Postgraduates from China would mean that less number of such youth would migrate to America which would have negative impacts on the human capital outsourcing. But it would provide more and more opportunities for the resident citizens to attain jobs within the nation which may bring in a balance in the later stages.

As we all know, Chinese economy is known for its labour potential and the contribution of Chinese technology to the international community is also well known. The role of well known American universities in shaping such potentials are also to be considered in this regard. In this regard, the blockade of educational attainment may result in a negative allignment of foreign relations and thus may likely cause a reduction in the technology transfer from China. But the exploitation of the natural resources may see a decline as more domestic trade and domestic technology promotions would happen. Thus, it can be understood that there may be an overall decline in the technological progress and labour supply in the short run economy, but in the longer run, it may see a balncing act from the domestic economy.