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Foreign Capital, Technology Transfer and Urban Unemployment: A Theoretical Analysis

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  • Kausik Gupta

    (The University of Burdwan)

Abstract

We consider a three-sector Generalized Harris-Todaro model where the third sector is the foreign enclave. It is assumed to be located in the urban area and uses sector-specific foreign capital. In this model technology transfer takes place from the foreign enclave to the domestic enclave. A dynamic version of the model is considered. The long run equilibrium and the comparative steady-state effects are analyzed in the presence of technology transfer. We get some interesting effects of reduction in the tax rate on foreign capital income on the short-run and long-run equilibrium levels of national income and urban unemployment rate under some meaningful conditions.

Suggested Citation

  • Kausik Gupta, 1999. "Foreign Capital, Technology Transfer and Urban Unemployment: A Theoretical Analysis," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 34(1), pages 51-71, January.
    • Handle: RePEc:dse:indecr:v:34:y:1999:i:1:p:51-71
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    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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