A trading country is defined as being relatively labour - abundant compared to its trading partner. The country produces two goods, good El is labour - intensive in production, and good Kay is capital - intensive in production. The country currently exports El and imports Kay. 

a. Illustrate and explain the impact of a large - scale immigration inflow on both goods producing sectors El and Kay in terms of i, the distribution of labour between sectors ii. effect on wages iii. effects on the mix of outputs of the two goods iv. effect on returns to capital in two goods-producing sectors and discuss the above separately for the short-run and long - run. 

b. Repeat the analysis above, but for a large inflow of foreign direct investment. Discuss i. the distribution of labour between sectors ii. effect on wages iii. effects on the mix of outputs of the two goods iv, effect on returns to capital in two goods-producing sectors and discuss the above separately for the short - run and long-run.

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The detailed answer for the above question is provided below a Impact of Largescale Immigration Inflow i Distribution of Labor between Sectors In the short run the influx of immigrants increases the s... View the full answer