thereby allowing higher rates of growth than would be possible reliance on domestic savings. From endogenous growth theory’s perspectives tells that foreign direct investment creates technological advancement that stimulates economic growth such as externalities which can balance the diminishing returns to capital (Romer‚ 1990‚ et al.‚ 1992). Foreign direct investments can also enhance growth by allowing host countries which are countries they are invested to use and access the advance technology that
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To what extent can Porter’s model of national competitive advantage adequately account for variations in national business systems and comparative economic performance? Give examples from 2 countries. Introduction: The Diamond Model Dickens‚ in his book shows how Porter argues that national competitive advantages are created through highly low processes through process that occur in a location and these processes are a Diamond. The diamond is an interconnected system of 4 major determinants of
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principal agent problem‚ and the prisoner’s dilemma. -Adverse Selection: -Perverse Incentives: -Principal Agent Problem: -Prisoner’s Dilemma: Chapter 3: Government and the Economy 5. In your own words‚ explain what an externality is. An externality is when someone/something has the incentive to do/make something‚ but it comes at the expense of something else. Take your bottle of water‚ for example‚ when producing the bottle the company produced pollution. However‚ the cost of the
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Econ 1011 Study Guide Opportunity Cost The opportunity cost is the cost of the forgone alternative. (If you have many alternative it is the one which has the highest value) Total opportunity cost / economic cost = Explicit cost + Implicit cost Production Possibilities Frontier - Points inside the PPF vs. outside the PPF - Shape of the PPF - Economic growth and PPF Law of Demand Other things remaining constant‚ the quantity demanded of a good rises when the price of the good
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This basically means when somebody other than the consumer or producer is faced with the negative affects. “When there is a negative externality‚ a tax can lead to economic efficiency” (Hubbard & O’Brien‚ 2015a). This statement is true because gas will always be in demand and no matter what the tax is people will pay for it. Some ways that this demand can be influenced is by making substitution
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Public Disclosure Authorized WPS5394 Policy Research Working Paper 5394 Public Disclosure Authorized The Economic Consequences of “Brain Drain” of the Best and Brightest Microeconomic Evidence from Five Countries John Gibson David McKenzie Public Disclosure Authorized Public Disclosure Authorized The World Bank Development Research Group Finance and Private Sector Development Team August 2010 Policy Research Working Paper 5394 Abstract Brain drain has long been a common
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the unemployed‚ retired and other section society who requires assistance to benefit. 2.7 Limiting negative externalities Controlling the negative externality effect is also the other area where tax law puts an important pressure to combat activities prone to jeopardizing other segments of the society. This law devises a mechanism to alleviate those problem associated with the externality effects due to hazardous products released from factories to the society which in consequence may pollute the
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Economics of Consumption Tax on Unhealthy Goods. Introduction: Unhealthy consumption prevails in the fields of nutrition‚ energy and transport. Taxing is one a solution to provide a healthier living. With globalization‚ qualities of goods do fail to meet the international standards. International movements of goods which damage health are increasing with Cross border marketing‚ promoting unhealthy behaviours of alcohol and tobacco consumption and unhealthy diets. (Richard Smith‚ 2003). The
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outcomes in a market economy: * adverse selection * “perverse incentives” * principal-agent problem‚ * the prisoner’s dilemma. Chapter 3: Government and the Economy 1. In your own words‚ explain what an externality is. 2. Besides addressing externalities‚ what other important and beneficial roles does government play in our market economy? Chapter 4: Government and the Economy II 1. What are the main reasons why government should only take a limited role in a market
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