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Immiserizing Growth for a Quota-Distorted Small Economy under Variable Returns to Scale

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  • Chi-Chur Chao
  • Eden S. H. Yu

Abstract

The authors demonstrate that growth of a small open economy distorted by import quotas, in contrast to the case of tariffs, improves welfare when the industries display identical variable (or constant) returns to scale. Furthermore, growth cannot reduce welfare if the industry that experiences technical progress exhibits a greater returns to scale than the static industry. Conversely, if the dynamic sector displays a smaller returns to scale than the static sector, growth of a quota-distorted small economy can be immiserizing. The authors' results are independent of whether Hicks-neutral technical progress occurs in the importable or the exportable sector.

Suggested Citation

  • Chi-Chur Chao & Eden S. H. Yu, 1991. "Immiserizing Growth for a Quota-Distorted Small Economy under Variable Returns to Scale," Canadian Journal of Economics, Canadian Economics Association, vol. 24(3), pages 686-692, August.
    • Handle: RePEc:cje:issued:v:24:y:1991:i:3:p:686-92
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    Cited by:

    1. Beladi, Hamid & Kwan Choi, E., 1995. "On the emergence of multinational corporations in developing economies: A note," Regional Science and Urban Economics, Elsevier, vol. 25(5), pages 675-684, October.
    2. Ravi Batra & Hamid Beladi & Reza Oladi, 2013. "Technical Progress and Real Wages Once again," Review of International Economics, Wiley Blackwell, vol. 21(3), pages 506-518, August.
    3. Chi‐Chur Chao & Bharat R. Hazari & Eden S. H. Yu, 2010. "Quotas, Spillovers, and the Transfer Paradox in an Economy with Tourism," Review of International Economics, Wiley Blackwell, vol. 18(2), pages 243-249, May.

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