In the short run (specificfactors) model, an FDI inflow
Into a country's manufacturing sector will cause:
A)an increase in the output of the agricultural sector.
B)an increase in the employment in the agricultural sector.
C)a decrease in the employment in the manufacturing sector.
D)an increase in the output and employment in the manufacturing sector.

Question

In the short run (specific­factors) model, an FDI inflow
Into a country's manufacturing sector will cause:
A)an increase in the output of the agricultural sector.
B)an increase in the employment in the agricultural sector.
C)a decrease in the employment in the manufacturing sector.
D)an increase in the output and employment in the manufacturing sector.

Quizplus · Accepted Answer

In the short-run (specific-factors) model, an FDI inflow into a country's manufacturing sector will increase the demand for labor and capital in that sector, leading to an increase in output and employment in the manufacturing sector. There should be no direct impact on the employment or output in the agricultural sector.

In the Short Run (Specific­factors) Model, an FDI Inflow

In the Short Run (Specificfactors) Model, an FDI Inflow