Foreign capital, non-traded goods and welfare in a developing economy in the presence of externalities
AbstractA three-sector, three-factor general equilibrium model is developed for a small open developing economy where an inflow of foreign capital generates externalities in the presence of a non-traded final commodity. There are two types of capital and the efficiency of labor depends positively on the consumption of the non-traded commodity. Effects of inflows of foreign capital on social welfare and human capital formation are examined. The analysis finds that while capital that is used in all the sectors may improve welfare, capital used specifically in the non-traded sector is likely to affect social welfare adversely. These results, which hold for a wide range of parameter values, can at least question the desirability of allowing entry of foreign capital in the non-traded final good sector that emanates externalities.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal International Review of Economics & Finance.
Volume (Year): 31 (2014)
Issue (Month): C ()
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/620165
Foreign capital; Externality; Non-traded good; Social welfare; General equilibrium;
Other versions of this item:
- 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.
- F18 - International Economics - - Trade - - - Trade and Environment
- O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
- Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Brecher, Richard A. & Diaz Alejandro, Carlos F., 1977. "Tariffs, foreign capital and immiserizing growth," Journal of International Economics, Elsevier, vol. 7(4), pages 317-322, November.
- Markusen, James R., 2002.
"Multinational Firms and the Theory of International Trade,"
8380, University Library of Munich, Germany.
- James R. Markusen, 2004. "Multinational Firms and the Theory of International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262633078, December.
- Sarbajit Chaudhuri, 2005.
"Foreign Capital Inflow, Non-Traded Intermediary, Urban Unemployment And Welfare In A Small Open Economy: A Theoretical Analysis,"
- Sarbajit Chaudhuri, 2001. "Foreign Capital Inflow, Non-traded Intermediary, Urban Unemployment, and Welfare in a Small Open Economy: A Theoretical Analysis," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 40(3), pages 225-235.
- Beladi, Hamid & Marjit, Sugata, 1992. "Foreign capital, unemployment and national welfare," Japan and the World Economy, Elsevier, vol. 4(4), pages 311-317, December.
- James R. Markusen, 1995. "The Boundaries of Multinational Enterprises and the Theory of International Trade," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 169-189, Spring.
- Mukherjee, Arijit & Tsai, Yingyi, 2013. "Multi-sourcing as an entry deterrence strategy," International Review of Economics & Finance, Elsevier, vol. 25(C), pages 108-112.
- Chandra, Vandana & Khan, M Ali, 1993. "Foreign Investment in the Presence of an Informal Sector," Economica, London School of Economics and Political Science, vol. 60(237), pages 79-103, February.
- Maiti, Dibyendu & Mukherjee, Arijit, 2013.
"Governance, foreign direct investment and domestic welfare,"
International Review of Economics & Finance,
Elsevier, vol. 27(C), pages 406-415.
- Dibyendu Maiti & Arijit Mukherjee, . "Governance, Foreign Direct Investment and Domestic Welfare," Discussion Papers 10/27, University of Nottingham, GEP.
- Anuj J. Mathew & Arijit Mukherjee, 2009.
"Intellectual property rights, southern innovation and foreign direct investment,"
Faculty Working Papers
15/09, School of Economics and Business Administration, University of Navarra.
- Mathew, Anuj Joshua & Mukherjee, Arijit, 2014. "Intellectual property rights, southern innovation and foreign direct investment," International Review of Economics & Finance, Elsevier, vol. 31(C), pages 128-137.
- Neary, J Peter, 2002.
"Foreign Direct Investment and the Single Market,"
CEPR Discussion Papers
3419, C.E.P.R. Discussion Papers.
- J Peter Neary, 2001. "Foreign Direct Iinvestment and the Single Market," Working Papers 200124, School Of Economics, University College Dublin.
- J. Peter Neary, 2001. "Foreign Direct Investment and the Single Market," Development Working Papers 160, Centro Studi Luca d\'Agliano, University of Milano.
- Glass, Amy Jocelyn & Saggi, Kamal, 1999.
"Multinational firms and technology transfer,"
Policy Research Working Paper Series
2067, The World Bank.
- Sarbajit Chaudhuri, 2005. "Labour Market Distortion, Technology Transfer And Gainful Effects Of Foreign Capital," Manchester School, University of Manchester, vol. 73(2), pages 214-227, 03.
- Chaudhuri, Sarbajit, 2007.
"Foreign capital, welfare and urban unemployment in the presence of agricultural dualism,"
Japan and the World Economy,
Elsevier, vol. 19(2), pages 149-165, March.
- Sarbajit Chaudhuri, 2005. "Foreign Capital, Welfare And Urban Unemployment In The Presence Of Agricultural Dualism," International Trade 0510010, EconWPA.
- Blalock, Garrick & Gertler, Paul J., 2008. "Welfare gains from Foreign Direct Investment through technology transfer to local suppliers," Journal of International Economics, Elsevier, vol. 74(2), pages 402-421, March.
- Sarbajit Chaudhuri, 2001. "Foreign Capital Inflow, Technology Transfer, and National Income," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 40(1), pages 49-56.
- Beladi, H. & Marjit, S., 1992.
"Foreign Capital and Protectionism,"
RCER Working Papers
310, University of Rochester - Center for Economic Research (RCER).
- Grinols, Earl L, 1991. "Unemployment and Foreign Capital: The Relative Opportunity Costs of Domestic Labour and Welfare," Economica, London School of Economics and Political Science, vol. 58(229), pages 107-21, February.
- Harris, John R & Todaro, Michael P, 1970. "Migration, Unemployment & Development: A Two-Sector Analysis," American Economic Review, American Economic Association, vol. 60(1), pages 126-42, March.
- Mattoo, Aaditya & Olarreaga, Marcelo & Saggi, Kamal, 2004.
"Mode of foreign entry, technology transfer, and FDI policy,"
Journal of Development Economics,
Elsevier, vol. 75(1), pages 95-111, October.
- Mattoo, Aaditya & Olarreaga, Marcelo & Saggi, Kamal, 2001. "Mode of Foreign Entry, Technology Transfer, and FDI Policy," CEPR Discussion Papers 2870, C.E.P.R. Discussion Papers.
- Khan, M. Ali, 1982. "Tariffs, foreign capital and immiserizing growth with urban unemployment and specific factors of production," Journal of Development Economics, Elsevier, vol. 10(2), pages 245-256, April.
- Marjit, Sugata & Beladi, Hamid, 1996. "Protection and the gainful effects of foreign capital," Economics Letters, Elsevier, vol. 53(3), pages 311-316, December.
- Sarbajit Chaudhuri & Shigemi Yabuuchi & Ujjaini Mukhopadhyay, 2006. "Inflow Of Foreign Capital And Trade Liberalization In A Model With An Informal Sector And Urban Unemployment," Pacific Economic Review, Wiley Blackwell, vol. 11(1), pages 87-103, 02.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If references are entirely missing, you can add them using this form.