The US is relatively capital abundant, and India is relatively labor abundant. Assume that the production of rice is more labor intensive than the production of cars. Suppose there are foreign direct investment (FDI) flows from the US to India, and the FDI is in the car industry. Answer the following questions.

a. Explain short-run and long-run effects of the FDI on India's pattern of production, imports and exports.

b. How will you answer in Part (a) change if the FDI from the US to India is in the rice industry? Explain your reasoning.