Factor mobility

 

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Factor mobility

The degree to which a factor of production, such as labor or capital, is able to move, either among industries or between countries, in response to differences in its factor price, thus tending to eliminate such differences.



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Capital mobility

Capital mobility

The ability of capital to move internationally. The degree of capital mobility depends on government policies restricting or taxing capital inflows and/or outflows, plus the risk that investors in one country associate with assets in another.


Perfect capital mobility

Perfect capital mobility

1. The absence of any barriers to international capital movements. 2. The requirement that, in equilibrium, rates of return on capital (interest rates) must be the same in different countries.




 
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