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Foreign capital, welfare and urban unemployment in the presence of agricultural dualism

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  • Chaudhuri, Sarbajit

Abstract

In a two sector mobile capital Harris-Todaro model, such as Corden and Findlay (1975), an inflow of foreign capital in the presence of protectionist policy is welfare deteriorating as well as unemployment accentuating. But, the developing countries have chosen liberalized investment and trade policies as their development strategies and have been able to attract a considerable amount of foreign capital during the last two decades. A relevant question is why these countries are yearning for foreign capital given its detrimental effects as predicted by the conventional theoretical literature on trade and development. This paper makes an attempt to address the above issue in terms of a three sector Harris-Todaro model with agricultural dualism and a non- traded final commodity. In the given setup, an inflow of foreign capital is likely to improve welfare and does not necessarily worsen the problem of unemployment. The paper may also be useful to explain as to why many of the developing economies have experienced ‘jobless growth’ in the liberalized regime.

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Bibliographic Info

Article provided by Elsevier in its journal Japan and the World Economy.

Volume (Year): 19 (2007)
Issue (Month): 2 (March)
Pages: 149-165

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Handle: RePEc:eee:japwor:v:19:y:2007:i:2:p:149-165

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Web page: http://www.elsevier.com/locate/inca/505557

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References

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  1. J. Bhagwati & T. N. Srinivasan, 1973. "On Reanalyzing the Harris-Todaro Model: Policy Rankings in the case of Sector-Specific Sticky Wages," Working papers 99, Massachusetts Institute of Technology (MIT), Department of Economics.
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  14. Manash Ranjan Gupta, 1999. "Foreign Capital, Unemployment, Worker's Efficiency and Fair Wage," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 34(1), pages 73-87, January.
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  17. Sarbajit Chaudhuri, 2003. "How and how far to liberalize a developing economy with informal sector and factor market distortions," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 12(4), pages 403-428.
  18. Chaudhuri, Tamal Datta, 1989. "A theoretical analysis of the informal sector," World Development, Elsevier, vol. 17(3), pages 351-355, March.
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Citations

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Cited by:
  1. Gilbert, John & Oladi, Reza, 2009. "Capital specificity, imperfect labor mobility and growth in developing economies," International Review of Economics & Finance, Elsevier, vol. 18(1), pages 113-122, January.
  2. Dwibedi, Jayanta & Chaudhuri, Sarbajit, 2011. "Poverty alleviation programs, FDI-led growth and child labour under agricultural dualism," MPRA Paper 29997, University Library of Munich, Germany.
  3. Mukhopadhyay, Ujjaini & Chaudhuri, Sarbajit, 2011. "Economic liberalization, gender wage inequality and welfare – a theoretical analysis," MPRA Paper 32954, University Library of Munich, Germany.
  4. Mukherjee, Soumyatanu, 2011. "Revisiting the Apparent Paradox: Foreign Capital Inflow, Welfare Amelioration and ‘Jobless Growth’ with Agricultural Dualism and Non-traded Intermediate Input," MPRA Paper 33410, University Library of Munich, Germany.
  5. Chatterjee, Tonmoy & Gupta, Kausik, 2013. "Mobility of Capital and Health Sector:A Trade Theoretic Analysis," MPRA Paper 48557, University Library of Munich, Germany.
  6. Chaudhuri, Sarbajit & Yabuuchi, Shigemi, 2007. "Foreign Capital and Skilled-unskilled Wage Inequality in a Developing Economy with Non-traded Goods," MPRA Paper 2645, University Library of Munich, Germany.
  7. Chaudhuri, Sarbajit, 2013. "Foreign capital, Non-Traded Goods and Welfare in a Developing Economy in the presence of Externalities," MPRA Paper 52140, University Library of Munich, Germany.
  8. Chaudhuri, Sarbajit & Banerjee, Dibyendu, 2009. "Foreign Capital, National Welfare and Unemployment in a Fair Wage Model," MPRA Paper 18005, University Library of Munich, Germany.
  9. Beladi, Hamid & Chaudhuri, Sarbajit & Yabuuchi, Shigemi, 2007. "Can International Factor Mobility lessen Wage Inequality in a Dual Economy?," MPRA Paper 2641, University Library of Munich, Germany.
  10. Chaudhuri, Sarbajit & Banerjee, Dibyendu, 2009. "Foreign Capital Inflow, Skilled-Unskilled Wage Inequality and Unemployment of Unskilled Labour in a Fair Wage Model," MPRA Paper 18004, University Library of Munich, Germany.
  11. Chaudhuri, Sarbajit, 2010. "Economic recession, demand constraint and labour markets in a developing economy," MPRA Paper 27433, University Library of Munich, Germany.
  12. Chaudhuri, Sarbajit & Banerjee, Dibyendu, 2010. "FDI in Agricultural Land, Welfare and Unemployment in a Developing Economy," MPRA Paper 23488, University Library of Munich, Germany.
  13. Chaudhuri, Sarbajit, 2008. "Fair Wage Hypothesis, Foreign Capital Inflow and Skilled-unskilled Wage Inequality in the Presence of Agricultural Dualism," MPRA Paper 9394, University Library of Munich, Germany.
  14. Chaudhuri, Sarbajit & Banerjee, Dibyendu, 2007. "Economic liberalization, capital mobility and informal wage in a small open economy: A theoretical analysis," Economic Modelling, Elsevier, vol. 24(6), pages 924-940, November.
  15. Chaudhuri, Sarbajit & Mukhopadhyay, Ujjaini, 2009. "Revisiting the Informal Sector: A General Equilibrium Approach," MPRA Paper 52135, University Library of Munich, Germany.
  16. Soumyatana Mukherjee, 2013. "Liberalization and "Jobless Growth" in a Developing Economy: some Extended Results," Discussion Papers 2013-07, University of Nottingham, GEP.
  17. Chaudhuri, Sarbajit, 2006. "Wage Inequality in a Dual Economy and International Mobility of Factors: DO Factor Intensities always matter?," MPRA Paper 1356, University Library of Munich, Germany.
  18. Chaudhuri, Sarbajit, 2008. "International Factor Mobility, Skills Formation and Welfare," MPRA Paper 9302, University Library of Munich, Germany.
  19. Hamid Beladi, . "An Elementary Proposition on Technical Progress and Non-traded Goods," Working Papers 0018, College of Business, University of Texas at San Antonio.

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