How can we model longrun FDI flows using a model
Similar to the longrun effects of longrun labor
Migration?
A)Use a simple supplyanddemand approach.
B)Use the Ricardian comparative advantage model.
C)Use the HeckscherOhlin model with the assumption that capital can migrate.
D)Use the Rybczynski theorem.

Question

How can we model long­run FDI flows using a model
Similar to the long­run effects of long­run labor
Migration?
A)Use a simple supply­and­demand approach.
B)Use the Ricardian comparative advantage model.
C)Use the Heckscher­Ohlin model with the assumption that capital can migrate.
D)Use the Rybczynski theorem.

Quizplus · Accepted Answer

The Heckscher-Ohlin model with the assumption that capital can migrate is the most suitable for modeling long-run FDI flows as it takes into account the role of capital in production and emphasizes that capital can be transferred across borders. This allows for a better understanding of the determinants of FDI flows in the long-term. The other models, such as the simple supply-and-demand approach or the Ricardian comparative advantage model, are not as well-suited for modeling FDI flows as they do not explicitly consider the role of capital mobility. The Rybczynski theorem is also not directly relevant as it focuses on the relationship between factor endowments and the production of two goods.

How Can We Model Long­run FDI Flows Using a Model

How Can We Model Longrun FDI Flows Using a Model