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Import quotas, tied aid, capital accumulation, and welfare

Author

Listed:
  • Chi-Chur Chao
  • Eden S. H. Yu

Abstract

Aid conditional on the purchase of an imported capital good increases the supply of, and demand for, the good. Examining the effects of tied aid on capital accumulation, the current account, and welfare, we find that two resultant conflicting forces render the price of the capital good indeterminate. If the demand pressure is larger than the supply response, the capital stock increases at the expense of the current account and welfare improves. Alternatively, if the demand pressure is less than the supply response, capital is reduced. This may be detrimental to welfare.

Suggested Citation

  • Chi-Chur Chao & Eden S. H. Yu, 2001. "Import quotas, tied aid, capital accumulation, and welfare," Canadian Journal of Economics, Canadian Economics Association, vol. 34(3), pages 661-676, August.
  • Handle: RePEc:cje:issued:v:34:y:2001:i:3:p:661-676
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    Citations

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    Cited by:

    1. Ravi Batra & Hamid Beladi & Reza Oladi, 2013. "Technical Progress and Real Wages Once again," Review of International Economics, Wiley Blackwell, vol. 21(3), pages 506-518, August.
    2. Sugata Marjit & Biswajit Mandal, 2016. "International Trade, Migration and Unemployment – The Role of Informal Sector," Economics and Politics, Wiley Blackwell, vol. 28(1), pages 8-22, March.
    3. Chi-Chur Chao & Bharat R. Hazari & Eden S. H. Yu, 2010. "Quotas, Spillovers, and the Transfer Paradox in an Economy with Tourism," Review of International Economics, Wiley Blackwell, vol. 18(2), pages 243-249, May.
    4. Bharat R. Hazari & Jean-Pierre Laffargue & Chi-Chur Chao & Eden S. H. Yu, 2007. "A Dynamic Analysis of Tied Aid," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00270896, HAL.

    More about this item

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade

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