International Factor Movements

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In international economics, International factor movements are movements of labor, capital and other factors of production between countries. Where movements of factors of production are unrestricted, factor price equalization is expected. Even with restricted movements, however, the Heckscher-Ohlin model predicts that free trade should lead to factor price equalization.

Although the effects of international factor movements may be analysed in an abstract model where all factors of production are treated similarly, movements of labor (migration) and capital (foreign investment) raise many issues that require separate treatment.