Question

Background

Imagine that you work for the World Bank and you have been called to Ghana to aid the new president to come up with a new international trade strategy.

You are told that the new government is interested in moving away from agriculture and into manufacturing. To do so, the government wants to pursuit a policy of import substitution industrialization (ISI).

You are given a brief about Ghana highlighting the following points:

• About half of Ghana’s population depends on agriculture, but Ghana still imports some of its food.
• The majority of Ghana's people live in rural areas and exist on a subsistence way of life.
• Ghana has one of the highest rates of income inequality in the world.
• Nearly half of the population is employed in agriculture.

QUESTION   

After a meeting with Ghana’s president you learn that the government is also interested in repatriating migrants that went to European countries to study engineering a decade ago. Explain how this is likely to change Ghana’s comparative advantage. Explaining with International Trade Theory (Pick 1 of 2):

Native-born and Foreign-born are substitutes

Native-born and Foreign-born are complement

Answer 1

LETS DISCUSS WHAT IS COMPETITIVE ADVANTAGE: IT IS WHEN A COUNTRY PRODUCES A GOOD OR SERVICE FOR A LOWER OPPORTUNITY COST THAT IS ABILITY TO PRODUCE SOMETHING MORE EFFICIENTLY AND EFFECTIVELY AT A LOWER COST THAN OTHER.

IF THE MIGRANTS ARE REPATRIATED BY THE GOVERNMENT THEN IT MIGHT FACE CHALLANGES IN SHIFT FROM AGRICULTURE TO MANUFACTURING AS ENGINEERS ARE WELL EXPERIENCED AND KNOWLEDGEABLE. THIS WILL SAVE THE COST AND TIME IN  EDUCATING THE NEW COMERS FROM AGRICULTURAL BACKGROUND.

KEEPIN THE FACT IN MIND THAT THE NEW GOVERNMENT WANTS TO SHIFT FROM AGRICULTURE TO MANUFACTURING.

WE WILL GO WITH THE SECOND OPTION MENTIONED THAT NATIVE-BORN AND FOREIGN-BORN ARE CPMLEMENT.

FIRST LETS DISCUSS WHAT INTERNATIONAL TRADE THEORY SAYS: IT SAYS THAT EFFIIENCY OF FIRMS IN A COUNTRY CHANGES MUCH AND THOSE FIRMS ENGAGED IN INTERNATIONAL TRADE HAVE HIGHER PRODUCTIVITY THAN FIRMS WHICH PRODUCE FOR DOMESTIC MARKET. IF THE GOVERNMENT IS INTERESTED IN REPATRIATING MIGRANTS THAT WENT TO EUROPEAN COUNTRIES TO STUDY ENGINEERING A DECADE AGO. THIS WILL NOT BENEFIC THA GOVERNMENT AS THESE MIGRANTS MUST HAVE GAINED CERTAIN SPECIFICATION IN THEIR WORK EXPERIENCES WHICH WOULD HELP THE GOVERNMENT IN ACHIEVING ITS GOAL OF MOVING FROM AGREECULTURE TO MANUFACTURING

THUS WE CAN SAY THAT BOTH NATIVE BORN AND FOREIGN BORN ARE COMPLEMENT AS THEY WILL SHARE THEIR KNOWLEDGE AS WELL THE WAY OF PERFORMANCES TO ACHIEVE SUCCESS.