Long-Run vs. Short-Run: Labor in Action

Page 1 of 5

Long-Run vs. Short-Run: Labor in Action

By | April 2007
Page 1 of 5
Long-Run vs. Short-Run:
Labor in Action

The whole concept of moving to a company to a neighboring country is very common. The concept of importation and exportation came with the increasing development of colonization. Importation is defined as, "To buy or bring in products from another country." The definition of Exportation is as follows, "To send goods to another country to sell (The American Heritage Dictionary)."The automotive market today follows a similar trend today. It has been noted that many countries are using, buying and importing foreign cars for many reasons, but many do not understand that these cars are built and directly sold in their country. The only difference that is seen here is that there are two different types of firms. There is a short-run and a long-run. A short-run company has a specific period of time where the product of at least one input is fixed and the rest of the factors can be varied (The American Heritage Dictionary). The long-run company is where all the quantities of all the factors of production used in the production process can be changed (The American Heritage Dictionary). In a case given by Professor Michael Porter of Harvard University, the Japanese company that decides to move into foreign land under the act of eliminating man power and replacing it with machine- like labor can be considered a long-run firm. The opposing company is the American automotive company model that decides to move into a foreign market and use the cheap labor to make their product, can be considered a short-run. When taking a company, either short- run or long- run, one must consider that certain attributes are accountable for the company's effect on the economy such as the motivation of the firm or outsourcing. Professor Porter reports, "Faced with high labor costs American consumer electronics firms moved to locate labor-intensive activities in Asian countries, leaving the product and production processes essentially the same." This...