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The Possibility of Welfare Gains with Capital Inflows in a Small Tariff-Ridden Economy

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  • Sen, Partha
  • Ghosh, Arghya
  • Barman, Abheek

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-Diaz-Alejandro (1977) proposition that capital inflows with full repatriation are necessarily immiserizing for a small tariff-ridden economy. The authors find that welfare gains changes are greater the higher the expenditure share of the capital-intensive differentiated good, the lower the substitutability between brands, and the lower the share of tariff revenue in national income. Copyright 1997 by The London School of Economics and Political Science

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  • Sen, Partha & Ghosh, Arghya & Barman, Abheek, 1997. "The Possibility of Welfare Gains with Capital Inflows in a Small Tariff-Ridden Economy," Economica, London School of Economics and Political Science, vol. 64(254), pages 345-352, May.
  • Handle: RePEc:bla:econom:v:64:y:1997:i:254:p:345-52
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    Cited by:

    1. Pi, Jiancai & Zhou, Yu & Yin, Jun, 2013. "International factor mobility, monopolistic competition, and wage inequality," Economic Modelling, Elsevier, pages 326-332.
    2. Arghya Ghosh & Partha Sen, 2012. "Privatization in a Small Open Economy with Imperfect Competition," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 14(3), pages 441-471, June.
    3. M. Ali Khan, 2007. "The Harris-Todaro Hypothesis," Labor Economics Working Papers 22206, East Asian Bureau of Economic Research.
    4. Hyder, Asma, 2007. "Wage Differentials, Rate of Return toEducation, and Occupational WageShare in the Labour Market of Pakistan," MPRA Paper 2224, University Library of Munich, Germany.
    5. M. Ali Khan, 2007. "The Harris-Todaro Hypothesis," PIDE-Working Papers 2007:16, Pakistan Institute of Development Economics.
    6. Atolia, Manoj & Kurokawa, Yoshinori, 2016. "The impact of trade margins on the skill premium: Evidence from Mexico," Journal of Policy Modeling, Elsevier, pages 895-915.
    7. Chakraborty, Brati Sankar, 2001. "Welfare consequence of capital inflow for a small tariff-protected economy," Journal of Development Economics, Elsevier, pages 305-316.
    8. Rajit Biswas, 2015. "Tariffs that may fail to protect: A model of trade and public goods," Economics Bulletin, AccessEcon, pages 361-370.
    9. Rajit Biswas, 2015. "Tariffs that may fail to protect: A model of trade and public goods," Economics Bulletin, AccessEcon, pages 361-370.

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