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Author Question: Describe the role of offshore banking and of offshore currency (eurocurrencies) trading What will ... (Read 63 times)

ENagel

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on: Jun 30, 2018
Describe the role of offshore banking and of offshore currency (eurocurrencies) trading
 
  What will be an ideal response?

Question 2

Why is the H.O. model called the factor-proportions theory?
 
  What will be an ideal response?


juicepod

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Reply #1 on: Jun 30, 2018
Answer to Question 1

Both have mushroomed due to increased international trade, increased multinational corporations and globalization. Students should also emphasize banks' desire to escape domestic government regulations and taxes on financial activities and political concerns from holding deposits in the country that issued them, which increases default concerns on the part of the foreign investors, etc.

Answer to Question 2

The H.O. model explores the nature and the limitations of assuming that the sole determinant of comparative advantage is inter-country differences in (relative) factor proportions.


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