Discuss the factors that could explain foreign direct investment (FDI) flows between countries.

Topic: there are 6 questions on the should be answered.

1- A:- Briefly explain Humes criticism of the views of the Mercantilists with particular emphasis on the price –specie –flow mechanism. (250 words)

B:-What do you regard as the main weaknesses of the Ricardian model as an explanation of trade patterns?
The following model gives the amount of labour inputs required to produce one unit of each of the commodities in each of the two countries. The wage rate in Germany is 5 Euros per hour and is £6 per hour in the UK.

wine chestnuts biscuits shirts apple
Germany 5hr 6hr 10hr 14hr 4hr

UK 3hr 5hr 4hr 7hr 3hr
If the exchange rate is 1.50 Euro = £1.00, which products will the Germany export? Which products will the UK export?
Keeping wage rates as they are stated above in both countries, calculate the upper and lower limits (in pounds per day) to the UK wage rate that are consistent with 2-way trade between Germany and the UK.
With the original exchange rates how is trade affected if the wage rate changes in Germany to 4 Euros per hour. (250 words)
C:- Discuss why the share of global trade accounted for by the BRICS (Brazil, Russia, India, China and South Africa) countries has increased significantly over the past decade. You must include in your discussion how the growth in technological advancement has contributed to their success. (800 words)

2- Discuss how relative factor abundance can determine the nature of trade flows between countries, making certain to point out needed assumptions and explain the Leontief paradox.
(300 words)

3- The more similar nations are in factor endowments the greater is the importance of intra -industry trade relative to inter-industry trade. Discuss. (500 words)

4- Critically discuss the following. The way to reduce unemployment is to enact tariffs on imported goods. (300 words)

5- Japan was a poor nation that survived by exporting textiles and toys. Then the Japanese government protected what were first inefficient high costs steel and automobile industries and those industries came to dominate the world. Discuss the role played by Import Substitution Industrialization (ISI) and Export Oriented policies in determining the success of Japan. (300 words)

6- Discuss the factors that could explain foreign direct investment (FDI) flows between countries. (300 words)

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