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Assume that Eurasia has KE = 100 and LE = 115, and Oceania has KO = 95 and LO = 80. Both have access to
Assume that Eurasia has KE = 100 and LE = 115, and Oceania has KO = 95 and LO = 80. Both have access to the same technologies to produce computers and win: Qj,c = mn{2Lj,c, Kj,c} and Qj,w = mn{Lj,w, 2Kj,w} where Lj,i and Kj,i represent respectively the number of workers and capital that country j allocates in industry i. Now, assume that capital mobility is allowed (but not on labor and goods). How much and in which direction capital will move? (Hint: think how will the relative factor endo
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