Two Reasons Why Capital May Not Flow to Poor Countries

question 91

Multiple Choice

Two reasons why capital may not flow to poor countries are that the poorer countries may:

• A) have economies unlike those described by a Cobb-Douglas production function and not be subject to diminishing returns to capital.
• B) have already accumulated high levels of capital relative to labour and may already have access to advanced technologies.
• C) legally prevent the inflow of foreign capital and provide strong legal protection of private property.
• D) have inferior production capabilities and not enforce property rights.

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Definitions:

Carrying Cost

The total cost of holding inventory, including storage, handling, insurance, and opportunity costs, among others.

Warehouse Security

Measures and practices implemented to protect stored goods, inventory, and facilities from theft, damage, and other risks.

Finding Suppliers

Refers to the process of identifying and selecting vendors or manufacturers that can provide the necessary goods or services for a business.

Machinery Set-Ups

The process and cost associated with configuring and preparing industrial machinery for a specific production run.