At 02:12 PM 8/14/96 +-200, Bart Croughs wrote:
If investors use their capital to invest abroad, this capital cannot at the same time be used to invest at home. Only after the investors decide not to invest abroad any more, they can invest it at home. But I was not talking about investors who decide to stop investing abroad and start investing at home. I was talking about investors who decide to invest abroad instead of at home, and the effect of such a decision on the wages in the US.
There is no straightforward link between amount of capital invested and productivity or wages. If there were, some steel plants in the Soviet Union would have had the best paid and most productive workers on earth. Additionally, countries which prevent capital outflows don't receive capital inflows and thus become poorer. DCF