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The Possibility Of Welfare Gains With Capital Inflows In A Small Tariff-Ridden Economy

Author

Listed:
  • Partha Sen

    (Delhi School of Economics)

  • Arghya Ghosh

    (Delhi School of Economics)

  • Abheek Barman

    (Delhi School of Economics)

Abstract

Capital inflows with full repatriation give rise to welfare improvement possibilities in a small tariff distorted economy when imperfect competition and increasing returns are allowed for in one sector of a two sector model. This is in contrast to the Brecher-Alejandro proposition that capital inflows with full repatriation are necessarily Immiserizing for a small tariff-ridden economy. We find that welfare gains chances are greater (a) the higher the expenditure share of the capital intensive differentiated good (b) the lower the substitutability between brands and (c) the lower the share of tariff revenue in national income.

Suggested Citation

  • Partha Sen & Arghya Ghosh & Abheek Barman, 1994. "The Possibility Of Welfare Gains With Capital Inflows In A Small Tariff-Ridden Economy," Working papers 09, Centre for Development Economics, Delhi School of Economics.
    • Handle: RePEc:cde:cdewps:09
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