Are trade and capital mobility substitutes or compliments?

In order to successfully devise an answer to the above question we need to understand that there are not one, but a number of various factors that need to be considered in order to come to any form of conclusion. We need to take into account the objectives of trade and the form of trade flows. Most importantly we also need to consider the impact of capital market integration on FDI flows, and the impact …

…the country. Finally I conclude that trade and capital are both compliments and substitutes depending on the development stage of the geographic area and the wealth of the particular area. REFERENCES and RESOURCES Bela Balassa (1963) "An empirical demonstration of Classical Comparative Cost Theory." Review of economics and statistics 4, pp231-238 Krugman, P (1979) "Increasing returns, monopolistic competition and internal trade" Journal on international economics,9, 4 November/ 469-478 www.rhul.ac.uk/economics/EC1112 www.j-bradford-delong.net/teachingfolder/