ECON 102 Lecture Notes - Lecture 21: Unemployment, Foreign Direct Investment
Document Summary
Pricing policies that encourage the use of appropriate technology. Pricing policies can play a leading role in guiding investment towards labor-intensive technologies in different sectors which are appropriate to the labor surplus economies in many developing countries. Government policies should aim at lowering the relative price of labor to create greater employment. The impact of removing factor price distortions on employment creation will depend on the degree of sustainability of labor for capital in the production processes of various sectors of the economy. The education systems adopted in developing countries should emphasize skills required by the labor market. Education expansion should, for example, balance the need to provide general education and professional skills since the latter are often more readily marketable. This can be quite instrumental in reducing seasonal unemployment. For example, regions that depend on tourism for employment can introduce alternative activities such as labor-intensive manufacturing during the off-peak season.
