Trade, Investment and Migration as Substitutes

There are three core mechanisms in international economics. These mechanisms include: trade in goods, movement of capital (also known as outsourcing), and migration of labor. All three of these mechanisms limit the power of policymakers to control economies. For instance, if tariffs increase, foreign investment will likely increase as well as companies seek to produce in the country to avoid higher tariffs. Similarly, if a country limits immigration, outsourcing will go up. If outsourcing is limited, immigration will likely increase. This video explores the economic impact of the movement of goods, capital and people.