According to the shortrun (specificfactors) model,
How will FDI affect wages in the recipient nation?
A)They will rise.
B)They will fall.
C)They will not affect wages.
D)They will fall in comparison to wages in the sending country.

Question

According to the short­run (specific­factors) model,
How will FDI affect wages in the recipient nation?
A)They will rise.
B)They will fall.
C)They will not affect wages.
D)They will fall in comparison to wages in the sending country.

Quizplus · Accepted Answer

In the short-run specific-factors model, FDI increases the demand for labor in the recipient nation, leading to higher wages as more capital is available for production, increasing the marginal productivity of labor.

According to the Short­run (Specific­factors) Model

According to the Shortrun (Specificfactors) Model