7 International mobility of labor and capital
Learning objectives 九三年
By the end of this chapter you should be able to understand:
∙ how international capital flows reduce differences in returns across countries and rai world output;
∙ how international flows of labor reduce differences in wages across countries but may reduce per capita income in the host country;
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∙ that a firm may operate in more than one country (as a multinational corporation), either to rve the local market rather than export (horizontal integration) or to source inputs more efficiently (vertical integration).
The previous chapters assume that goods are internationally mobile (i.e. that merchandi trade occurs) but that factors of production are not mobile. The basis of Heckscher–Ohlin tr
春风的诗句ade is precily that large differences in relative factor endowments produce parallel differences in factor prices; the in turn lead to differences in relative goods prices, which makes trade bad on comparative advantage possible. A country with a relative abundance of labor, for example, will have low wages, which will give it a comparative advantage in labor-intensive goods such as apparel and shoes. Differences in factor prices exist prior to trade results becau labor and capital are internationally immobile. Otherwi, labor and capital would relocate to eliminate the differences.
市级三好学生When daily news reports headline the challenges pod by immigration or debate the desirability of allowing foreign investment, we readily conclude that the assumption of completely immobile factors of production conflicts with reality. At least some labor and capital movement occurs between countries, as we document below. Labor migrates, legally or otherwi, from low- to higher-wage countries. International capital flows eking higher returns are a major element of international finance. Of cour, labor mobility is limited by immigration laws, transportation costs, lack of information about job opportunities, and language differences. International investors are deterred by different l
egal and regulatory environments, discriminatory taxes, potential expropriation, incomplete information, and a variety of risks, including a decline in the value of asts it holds that are denominated in foreign currencies. Nevertheless, concerns over globalization rest on the rapid increas in labor and capital mobility internationally as much as on the increa in international trade.
Trade between dissimilar countries with different factor endowments can lead to a reduction in wages in labor-scarce countries, and greater immigration into labor-scarce countries can result in lower wages, too. From a political perspective, labor is likely to oppo freer trade in a labor-scarce country. It also is likely to advocate stricter immigration policies and fewer incentives for capitalists to invest abroad. This chapter elaborates the rationale for such positions. We also consider why the operations of multinational corporations involve more than the movement of capital from one country to another.
Measures of capital and labor mobility
冷铁
Labor mobility can be demonstrated either by looking at the annual flow of immigrants into a country or by considering the accumulated total of foreign-born workers that live in a country. Jeffrey Williamson summarizes US experience in the two dimensions in the following terms:
你的误区The US annual immigration rate fell from 11.6 immigrants per thousand in the 1900s to 0.4 immigrants per thousand in the 1940s, before rising again to 4 immigrants per thousand in the 1990s. The proportion of the US population foreign born had fallen from a 1910 peak of 15 percent to an all-century low of 4.7 percent in 1970. The postwar immigration boom incread the foreign-born share to more than 8 percent in 1990 and more than 10 percent in 2000. Thus, the US has come two-thirds of the way back to reclaiming the title “a nation of immigrants” after a half-century retreat. While the immigration rate is now only a third of that achieved at its peak in the first decade of the 20th century, the contribution of immigration to population and labor force growth is similar becau the rate of natural increa has also declined.abcdv
一村一辅警
Within Europe, Germany experienced immigration rates greater than 1.0 percent in the early 1990s due to the opening up of Eastern Europe. Table 7.1 reports the share of the immigrant population in veral OECD countries, a figure that can be measured more accurately from census data than most annual flow calculations are. They show that in most of Europe and in the United States, there has been a noticeable increa in the immigrant share of the population. The rising ratio can be explained by the large role that immigration plays in overall population growth for the countries. For example, between 1999 and 2004 the UK population ro by a little over 1 million people, and the number of immigrants living in the UK ro by a little over 1 million people. Not surprisingly, the immigrant share of the total population ro from 7.6 percent to 9.3 percent. [Table 7.1 about here]
