ABSTRACT
This chapter discusses the important questions that are whether national capital markets are segmented and how close is the relation between national investment and national savings. It also discusses the prices of the production factors are related to each other and a factor-price frontier exists for a given production technology. Besides the markets for goods, the factor markets play a decisive role in the paradigm of the world economy. The adjustment processes in the world factor markets are thus of great importance. The factor-price frontier is also valid for single economies or regions of the world. Depending on the production technologies, the frontier may be different for different countries. The labor markets of the world will thus be characterized by regional segmentation. One may also imagine that this supply curve for new capital represents households or countries with different rates of time preference.
