Part Two - Disscussion questions

RMIT University Assessment 1: Part Two Discussion questions Student: Jack Buchanan s3897380 Teacher: Anindita Dutta Course: ECON 1086 Business in the Globalised Economy Due date: 4/10/2023
Question 1: The Transformative Power of Foreign Direct Investment (FDI): A Path to Poverty Reduction and Economic Progress Foreign Direct Investment (FDI) allows for the transfer of funds from foreign people or businesses to a nation, this creates a highway for the transfer of foreign information to the host country which in turn can reduce poverty levels in the foreign and domestic countries alike. FDI can reduce poverty levels through the exchange of cutting-edge technology, knowledge, and management techniques between foreign and domestic businesses, which is commonly included in FDI. Technology's spread may boost productivity and competitiveness, opening doors for economic expansion and employment development. For instance, global firms frequently impart cutting-edge production techniques and best practices to the nations where they are based. The host country can support its anti-poverty activities, which range across a variety of social welfare programmes, healthcare improvements, and educational breakthroughs, thanks to the increase in tax revenue brought about by FDI. FDI can also serve as a stimulus for the creation of many types of infrastructure, including roads, utilities, and seaports. This increased infrastructure therefore creates a favourable business climate and supports economic growth. Additionally, FDI frequently involves investments in the improvement of the knowledge and abilities of the local worker, resulting in a more skilled and qualified labour pool. The ripple effects of job creation are another significant part of FDI's importance. Jobs are inevitably created or expanded as a result of FDI, and these jobs are vital for eradicating poverty since they give individuals and their households financial security. Empirical evidence FDI and reduced poverty typically have a beneficial association, according to empirical findings. For instance, South American Brazil has seen considerable foreign direct investment in various sectors, including the car and electronics industries. Research indicates that FDI benefits Brazil's income distribution by reducing income inequality and, as a result, aiding in the eradication of poverty (Santander 2009). Furthermore, Chile has successfully recruited FDI to the mining and manufacturing sectors. Because of this investment's increased employment opportunities and economic diversification, poverty rates have decreased (InvestChile 2021).
With all these incredible things that FDI does to help fight poverty, it also can inflate poverty in countries such as creating environmental concerns and income inequality, if not managed effectively. This was seen in Southern Nigeria after foreign oil behemoth Shell caused a mass oil spill resulting in environmental deterioration, loss of livelihoods, health issues, social unrest, and cultural loss (Reuters, 2023). Question 2: Unlocking Manufacturing Support: Insights from the Heckscher- Ohlin and Melitz Models on Immigration Policy By using the Heckscher-Ohlin and Melitz Models we can better understand why the manufacturing sector would be the main supporter of the immigration policy over the agriculture sector. Advocates: Industry Manufacturing The Heckscher-Ohlin Model emphasises how important it is for countries to concentrate on manufacturing items that need a lot of production inputs. This is consistent with the need for labour and capital inputs in the manufacturing sector. This tactic is supported by the proposed immigration policy, which widens the pool of workers available to the industrial sector. According to the theory, immigration increases the availability of labour by reducing the industry's dependency on capital. Additionally highlighting the importance of innovation and competition is the Melitz Model. Immigration may draw people with certain skills and commercial knowledge, promoting innovation and enhancing industrial sector competition. The industrial sector's desire for ongoing competitiveness needs access to competent people and digital competence as the global economic climate evolves towards virtual globalisations. This makes the industrial industry stand out as an ardent advocate of the proposed immigration bill. The manufacturing sector emerges as the main supporter of immigration policy due to its unique labour and capital requirements as well as its need to maintain competitiveness in the face of quick changes in the global economic environment. Word count: 615
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