Chapter 7 International Factor Movements Prepared by Iordanis Petsas To Accompany International Economics: Theory and Policy International Economics: Theory and Policy, Sixth Edition by Paul R. Krugman and Maurice Obstfeld

Copyright © 2003 Pearson Education, Inc.Slide 7-2  Introduction  International Labor Mobility  International Borrowing and Lending  Direct Foreign Investment and Multinational Firms  Summary  Appendix: More on Intertemporal Trade Chapter Organization

Copyright © 2003 Pearson Education, Inc.Slide 7-3 Introduction  Movement of goods and services is one form of international integration.  Another form of integration is international movements of factors of production (factor movements).  Factor movements include: Labor migration Transfer of capital via international borrowing and lending International linkages involved in the formation of multinational corporations

Copyright © 2003 Pearson Education, Inc.Slide 7-4  A One-Good Model Without Factor Mobility Assumptions of the model: –There are two countries (Home and Foreign). –There are two factors of production: Land (T) and Labor (L). –Both countries produce only one good (refer to it as “output”). –Both countries have the same technology but different overall land-labor ratios. –Home is the labor-abundant country and Foreign is the land-abundant country. –Perfect competition prevails in all markets. International Labor Mobility

Copyright © 2003 Pearson Education, Inc.Slide 7-5 International Labor Mobility Labor, L Output, Q Q (T, L) Figure 7-1: An Economy’s Production Function

Copyright © 2003 Pearson Education, Inc.Slide 7-6 International Labor Mobility Labor, L Marginal Product of labor, MPL MPL The area under the marginal product curve equals total output.

Copyright © 2003 Pearson Education, Inc.Slide 7-7 Rents Wages Real wage MPL Labor, L Marginal Product of labor, MPL International Labor Mobility Figure 7-2: The Marginal Product of Labor

Copyright © 2003 Pearson Education, Inc.Slide 7-8  模型目的。  內生變數：決定模型兩軸。  行為法則：畫出模型曲線。  均衡：決定均衡之內生變數。  外生衝擊 判斷是否為外生變數改變？ 判斷此外生變數之改變將影響哪些行為法則？ 判斷此外生變數之改變造成行為法則何種影響？ 學習經濟模型五步驟 模模型目的。