Quote:
Originally Posted by RunForTheRoses
If factors of production are as mobile as traded goods, the case for free trade--that it benefits all countries--collapses. There is no known case for free trade if factors of production are as mobile as traded goods.
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But can the factors of production ever become that mobile?
Certainly natural resources are factors of production. We buy coffee from Central America because it grows better there than in Idaho or Vermont.
Another aspect of that is when trade is differentiated into goods and services. While the US is running a YUGE trade deficit in goods, it is running a trade surplus in services. Are the factors of production of US services mobile, or could they ever be in the near future?
