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Answer on Macroeconomics Question for Nijah

Question #25705
The PPF curve shows the economic choices a country can make about production given scarce resources, a given technology, and a given quantity of inputs. Assume you are a developing country, producing food and clothing at maximum capacity. What could happen when foreign investors start investing in your country?
Discuss what type of foreign investments would be best for the economy’s PPF. What are the opportunity costs of these decisions?
Expert's answer
The PPF curve shows the economic choices a country can make about production given scarce resources, a given technology, and a given quantity of inputs.
If foreign investors start investing in my country, the best way will be portfolio investment, because it allows significant increase in capital resources without the straight foreign control of the production. So, the PPF curve will expand and move to the right due to increase of the total output.
There are several opportunities of investment: to improve the technology, to support production either of more food, or of more clothing.

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