Welfare Enhancing Capital Imports
AbstractThis paper provides a model to consider the conditions under which an acceptance of foreign capital is welfare enhancing in a multi-commodity multi-factor framework. Contrary to the pessimistic conventional wisdom of capital imports and welfare, we provide a justification for the acceptance of foreign capital and the diversification of industrial structure in developing countries. A sufficient condition for the acceptance of foreign capital to be welfare enhancing is that all domestic factors move into the new export sector in equal proportion to the endowments of factors.
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Bibliographic InfoPaper provided by Kyoto University, Institute of Economic Research in its series KIER Working Papers with number 641.
Date of creation: Oct 2007
Date of revision:
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Postal: Yoshida-Honmachi, Sakyo-ku, Kyoto 606-8501
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More information through EDIRC
foreign capital; export sector; tariff revenue; welfare;
Find related papers by JEL classification:
- F11 - International Economics - - Trade - - - Neoclassical Models of Trade
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-11-10 (All new papers)
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