International Factor Movements and Multinational Corporations

Abstract

Thus far we have studied the principles behind international trade: what motivates the flows of goods between countries, and what are the welfare effects of these flows to individuals, countries and the world as a whole. Without any doubt international trade is still the major force promoting economic integration in the world. But it is not the only one: the international movements of resources may serve equally as well or, in some cases better, to integrate economies. Our attention now turns to the international flows of the two most used resources: labour and capital.