Contends that it is widely believed that cheap labor in poor countries attracts foreign investors. Asserts that historical evidence indicates that past patterns of direct foreign investment in poor countries are inconsistent with the cheap-labor argument. Includes two figures and one table. (CFR)

Contends that unemployment is an example of market failure. Argues that explaining unemployment from this supply-demand approach is preferable to the traditional explanation that high "real wages" are the cause. Reveals that many prominent economists entered the field because of their concern for the social problems caused by…