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Economic Growth with Foreign Capital

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Author Info
Henry Thompson

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Abstract

In growth theory, foreign investment places a small open economy in the international steady state. In applied growth theory, foreign investment is assumed to shift technology. The present growth model separates foreign from domestic capital and develops the steady state where both capital/labor ratios are stationary. A capital scarce country would attract foreign investment and may arrive at a steady state with perpetual foreign investment. Such a steady state foreign investment host is characterized by low saving and high labor growth rates, and source countries the opposite. Incomplete convergence characterizes economic growth with foreign capital. Copyright © 2008 The Author. Journal compilation © 2008 Blackwell Publishing Ltd.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1467-9361.2008.00395.x
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Publisher Info
Article provided by Blackwell Publishing in its journal Review of Development Economics.

Volume (Year): 12 (2008)
Issue (Month): 4 (November)
Pages: 694-701
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Handle: RePEc:bla:rdevec:v:12:y:2008:i:4:p:694-701

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This page was last updated on 2009-11-22.

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