Masao Oda () (Ritsumeikan University and University of Shimane) Koji Shimomura (Kobe University) Ryuhei Wakasugi () (Institute of Economic Research, Kyoto University)
Abstract
This 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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Publisher Info
Paper provided by Kyoto University, Institute of Economic Research in its series KIER Working Papers with number
641.
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: