Question

What (if anything) does it tell you that GE moved high refrigerator production to Mexico but kept low end here?

Assume that the US has a comparative advantage in producing good x, which it exports and has exported for many years. Does that mean it will continue to have a comparative advantage in x? Why (not)? If not, why might it change?

Most capital goods have a world-wide market. If so how is it that one country can have an advantage in capital intensive goods? Won’t all other countries simply buy the same capital and if they pay lower wages won’t manufacture of those goods go to the low wage country? Why aren’t K/L ratios essentially the same?

Answer 1

It simply tells that comparative advantage is with Mexico because it has lower labour cost. So GE shifted production to Mexico to cut costs and only kept minimum amount of manufacturing capacity in usa

B NO it would. It would change due to better human capital, knowledge, more labour in trading nations with respect to usa.

3 There are many reasons. First all technology is not sold due to strategic reasons to lower wage nations. Further these poor countries can't finance initial cost of setting plants. Also politicians and people in domestic countries are against outsourcing. Neither do these countries have human capital required. Even though substantial amount of capital has moved for example to low cost countries like China.