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FDI, Unemployment, and Welfare in the Presence of Agricultural Dualism: A Three-Sector General Equilibrium Model

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  • Rakhi Banerjee

    (Department of Economics, Gurudas College, Kolkata, India)

  • Ranjanendra Narayan Nag

    (Department of Economics, St. Xavier’s College (Autonomous), Kolkata, India)

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    Abstract

    The present paper uses a three-sector general equilibrium framework to examine the effect of Foreign Direct Investment (FDI) on unemployment and welfare in labour-surplus economies in the post-globalisation era. We show that the expansion of land-hungry export-oriented agricultural sector through FDI accentuates the problem of urban unemployment in the presence of sticky urban wage and agricultural dualism. We also note that multiple cross-effects and factor specificity play an important role in determining change in output composition and welfare in the wake of the inflow of foreign capital.

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    File URL: http://www.pide.org.pk/pdf/PDR/2010/Volume2/119-128.pdf
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    Bibliographic Info

    Article provided by Pakistan Institute of Development Economics in its journal The Pakistan Development Review.

    Volume (Year): 49 (2010)
    Issue (Month): 2 ()
    Pages: 119–128

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    Handle: RePEc:pid:journl:v:49:y:2010:i:2:p:119-128

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    Related research

    Keywords: Agricultural Dualism; FDI; Unemployment; Welfare;

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