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What are location advantages ? Discuss how they may incentivize MNEs to pursue FDI into: a) developing countrues and b) developed countries.
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- Explain why it is difficult to deal with (reduce/eliminate) hiddenunemployment in less developed countries.What is nonrivalry, and how does it lead to increasing returns? In your answer,what role does the standard replication argument play? Is national defenserivalrous or nonrivalrous?Indicate whether each of the following statements is trueor false, and explain your reasoning. An intervention which raises nominal GDP will also decrease un-employment. Immigration into a country leads that country to focus more oncapital intensive goods.
- What is the empirical evidence for the existence of the NAIRU?Suppose in the model there is a limited commitment friction and the possibility the nation could default in the current or future periods. Suppose that, if the nation does not default, then the limited commitment constraint does not bind. Could default still be preferred in the current period to not defaulting? Explain, with the aid of a diagram.What are the dimenstions of Policy Implementation
- Economic factors are often the primary drivers of FDI decisions. write brief notes on the following when evaluating countries for investment: GDP and Growth Prospects: Market Size: Infrastructure:. Labor Market: Legal and Regulatory Environment:In the model of the poverty trap used by Sachs (also known as the Lewis model), Y=min(AK,BL). (where Y is GDP, K is capital stock, L is labor, and A and B are model parameters). Using this model, give an algebraic expression for the minimum amount of aid necessary to exit a poverty trap for a country. The necessary aid should be as a ratio to the recipient’s GDP. Show how this amount depends on the depreciation rate for the capital stock, the population growth rate for the country, the rate of return to capital (A), and the recipient country’s saving rate. Now calculate the required amount of aid if the depreciation rate = .05, the population growth rate =.02, A=0.2, B=0.4, and the saving rate = 0.15. Explain why the country would remain in poverty without this amount of aid. Discuss what assumptions on surplus labor and aid effects are necessary for the model to be correct on how aid is both necessary and sufficient to end the poverty trap. Discuss what the model says about…As we grow up, we are told about the virtues of thrift. Those who spend all their income are condemned to end up poor. Those who save are promised a happy life. Does the IS model support these predictions? please help me understand this