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Direct Foreign Investment In A Small Open Economy And Global Trade Liberalization In Agriculture: A Note

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Author Info

  • Sarbajit Chaudhuri

    (Dept. of Economics, Calcutta University, India)

Abstract

In a production structure reasonable for a developing economy this note shows that there may arise a conflict between the worldwide liberalized trade policies in agriculture, which raise the price of the economy’s primary exportable commodity, and the inflow of foreign capital into the economy. However, if the economy strictly adheres to the different facets of the agricultural trade liberalization policies, e.g. the removal of the indirect farm subsidies, the paper argues that the possible conflict may be avoided. The paper provides a theoretical basis for the removal of the farm subsidies if the economy wants to develop its technologically more advanced sectors with an adequate supply of foreign capital.

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File URL: http://128.118.178.162/eps/it/papers/0510/0510012.pdf
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Bibliographic Info

Paper provided by EconWPA in its series International Trade with number 0510012.

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Length: 9 pages
Date of creation: 23 Oct 2005
Date of revision:
Handle: RePEc:wpa:wuwpit:0510012

Note: Type of Document - pdf; pages: 9
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Web page: http://128.118.178.162

Related research

Keywords: Liberalized trade policy in agriculture; foreign capital inflow; rate of return on foreign capital; fertilizer subsidy;

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References

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  1. Sarbajit Chaudhuri & Ujjaini Mukherjee, 2005. "Removal Of Protectionism, Foreign Investment And Welfare In A Model Of Informal Sector," International Trade 0511009, EconWPA.
  2. Motta, Massimo, 1992. "Multinational firms and the tariff-jumping argument : A game theoretic analysis with some unconventional conclusions," European Economic Review, Elsevier, vol. 36(8), pages 1557-1571, December.
  3. Chaudhuri, T. Datta & Adhikari, Smita, 1993. "Free trade zones with Harris-Todaro unemployment A note on Young-Miyagiwa," Journal of Development Economics, Elsevier, vol. 41(1), pages 157-162, June.
  4. Hoekman, Bernard & Anderson, Kym, 1999. "Developing country agriculture and the new trade agenda," Policy Research Working Paper Series 2125, The World Bank.
  5. Manash Gupta, 1994. "Duty-free zone, unemployment, and welfare a note," Journal of Economics, Springer, vol. 59(2), pages 217-236, June.
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