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Foreign Capital, Urban Unemployment, and Economic Growth

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  • Fung, Michael Ka-yiu
  • Zeng, Jinli
  • Zhu, Lijing

Abstract

A three-sector endogenous growth model, is used to study the effects of foreign direct investment (FDI) on the dynamics of urban unemployment, labour income, and capital income as well as national welfare in a Harris-Todaro economy. It is shown that more FDI can affect the economy's dynamics and national welfare positively or negatively. The paper derives conditions as to how the growth rate and welfare effects of FDI relate to the intersectoral mobility of capital, the destination of FDI, the elasticities of substitution, and the factor intensities of the final good production. Copyright 1999 by Blackwell Publishing Ltd.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Review of International Economics.

Volume (Year): 7 (1999)
Issue (Month): 4 (November)
Pages: 651-64

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Handle: RePEc:bla:reviec:v:7:y:1999:i:4:p:651-64

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0965-7576

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Cited by:
  1. Dascher, Kristof, 2013. "Foreign Direct Investment into Open and Closed Cities," MPRA Paper 49197, University Library of Munich, Germany.
  2. Adam P. Balcerzak & Miroslawa Zurek, 2011. "Foreign Direct Investment and Unemployment: VAR Analysis for Poland in the Years 1995-2009," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 3-14.

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