Question

Real capital is supposed to earn a higher return where it is scarce. However, most international investment flows to the IACs (where capital is relatively abundant) rather than to the DVCs (where capital is very scarce). This is true because_______.

Answer 1

the return on investment is higher in IACs because of superior infrastructure and workforce.

Step-by-step explanation:

Based on the information provided within the question it can be said that the return on investment is higher in IACs (which refers to Industrially Advanced Countries) because of superior infrastructure and workforce, that allow for higher production and overall quality. Unlike DVCs which are the opposite in this aspect.