Foreign Direct Investment, Income Inequality

• Clip URL: https://criticalcommons.org/view?m=7n3xia6QP
• Concepts: Gains from trade, production possibilities, opportunity costs, comparative advantage, foreign direct investment, national spending approach, technology transfer
• Background: In Queen Sono, we get hints of Africa’s abundance of natural resources, such as the diamond mine in episode 1 and the mention of an oil rig in episode 3. The non-governmental organization Afrifeed also accuses the company Superior Solutions of planning to exploit Africa’s natural resources. The heiress of the private arms company Superior Solutions concludes her speech by saying: “All these regions have the resources to support big businesses, to attract foreign direct investment. We all dream of an Africa that is at peace with itself, an Africa ready for a new and prosperous future.”
• Question 1: Research what commodities Sub-Saharan African countries mainly export. Then, using trade theories, explain how African countries can benefit from trade.
• Question 2: Table 1 illustrates the advantages of the two countries, expressed in terms of how many hours it takes to produce each good. To simplify, let’s say that each country has 100 worker hours.

Table 1. Number of Hours to Produce One Unit

First, calculate the production possibilities before any trade. Second, calculate the opportunity costs and discuss which country has a comparative advantage in producing copper and computers.

• Question 3: Discuss whether foreign direct investment can help increase the economic growth of Africa’s poorer countries.

• Clip URL: https://criticalcommons.org/view?m=QpT8ByVyR
• Concepts: Income inequality, labor market, education, technological progress
• Background: Jinn was shot in the cities of Petra and Amman. In this clip, we meet the family of Hosny, a Bedouin teenager who disappeared from the ancient city and is suspected of being possessed by a spirit. Hosny’s family lives in Petra, in a modest and traditional house. Fahed lives in a modern villa with a pool in Amman, the capital and largest Jordan city.
• Question: Compare the Bedouins’ living conditions with those of Amman’s high schoolers. Explain the societal issue of economic inequality and identify potential causes by comparing Hosny and Fahed’s lifestyles.