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FDI, Unemployment, and Welfare in the Presence of Agricultural Dualism: A Three-Sector General Equilibrium Model

Author

Listed:
  • Rakhi Banerjee

    (Department of Economics, Gurudas College, Kolkata, India)

  • Ranjanendra Narayan Nag

    (Department of Economics, St. Xavier’s College (Autonomous), Kolkata, India)

Abstract

The present paper uses a three-sector general equilibrium framework to examine the effect of Foreign Direct Investment (FDI) on unemployment and welfare in labour-surplus economies in the post-globalisation era. We show that the expansion of land-hungry export-oriented agricultural sector through FDI accentuates the problem of urban unemployment in the presence of sticky urban wage and agricultural dualism. We also note that multiple cross-effects and factor specificity play an important role in determining change in output composition and welfare in the wake of the inflow of foreign capital.

Suggested Citation

  • Rakhi Banerjee & Ranjanendra Narayan Nag, 2010. "FDI, Unemployment, and Welfare in the Presence of Agricultural Dualism: A Three-Sector General Equilibrium Model," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 49(2), pages 119-128.
    • Handle: RePEc:pid:journl:v:49:y:2010:i:2:p:119-128
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    More about this item

    Keywords

    Agricultural Dualism; FDI; Unemployment; Welfare;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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