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Essay / Research Paper Abstract
This 4 page paper considers how international factor movements; movements of labour and capital, can substitute for trade. The paper uses examples to illustrate points raised. The bibliography cites 6 sources.
Page Count:
4 pages (~225 words per page)
File: TS14_TEfacmov.rtf
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Unformatted sample text from the term paper:
any factor of production, such as labour or capital. This means that migration of workers as well as direct foreign investment are forms of capital movement as is lending or
borrowing internationally. If we want to consider hw these movements may substitute for trade we need to look at the purpose of trade. At a basic level this may
be seen as the creation and then acquisition of different items required, such as food. However if we take this to the economic level, producing and trade is to create
and maximise the returns created for subsequent trade to take place (Nellis and Parker, 2000). There are also other reasons for trade taking pace. If we look at the European
Union the reason for the development of the union was political, to try and create peace and stability using trade links and ties, to achieve what political negotiation could not
achieve (Weatherill and Beaumont, 2000). Where countries are tied together through trade, they become economically interdependent making conflict less likely. The development of a free trade area; the EU has
created stability in the area. Therefore, some functions of trade may be more than economic. Trade develops though aspects such as comparative advantage, or a lack of comparative disadvantage,
deepening on which trade theory is considered. May of these trade theories ignore the aspect of factor movement. However, when we look at the world today, factor movement is
an important aspect of trade, integrating and substituting for it. A country will trade on the resources it has, hence the development of Coffee plantations in Korea, creating a resource.
If we look at areas where there are not natural resources there are examples of factor movement substituting for trade. One example is Hong Kong. Hong Kong is a
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