Consider an offshoring model of reverse FDI in which
Foreign's offshore skilled labor activities to Home
because Home's skilled labor has a lower relative wage
than Foreign's skilled labor.Also assume that the costs
of capital and trade are uniform across production
activities.
A) Will Foreign's offshored production activities be high
or low on the value chain for a given product?
B) Suppose that Foreign uniformly increases its tariff
level, effectively increasing the cost of importing all
goods and services from abroad.How does this affect
the slicing of the value chain?

Question

Quizplus · Accepted Answer

The Answer of Consider an offshoring model of reverse FDI in which
Foreign's offshore skilled labor activities to Home
because Home's skilled labor has a lower relative wage
than Foreign's skilled labor.Also assume that the costs
of capital and trade are uniform across production
activities.
A) Will Foreign's offshored production activities be high
or low on the value chain for a given product?
B) Suppose that Foreign uniformly increases its tariff
level, effectively increasing the cost of importing all
goods and services from abroad.How does this affect
the slicing of the value chain?

Consider an Offshoring Model of Reverse FDI in Which