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Foreign Capital, Processing Incentives, and Urban Unemployment


  • Gilbert, John

    () (Utah State University)

  • Wahl, Thomas

    () (Washington State University)


We use a general equilibrium model of a small developing economy with urban unemployment to illustrate the impact of processing incentives in the presence of foreign owned factors of production. We show that the location of the processing industry plays a crucial role in determining whether or not processing incentives will raise welfare through employment effects, but, once stability conditions are imposed, does not alter the positive investment terms-of-trade effect resulting from foreign ownership of resources.

Suggested Citation

  • Gilbert, John & Wahl, Thomas, 2002. "Foreign Capital, Processing Incentives, and Urban Unemployment," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 17, pages 262-272.
  • Handle: RePEc:ris:integr:0194

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    More about this item


    foreign capital; processing; unemployment;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General


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