Capital Mobility—a resource curse or blessing? How, when, and for whom?
This paper investigates which of the two types of countries—resource-rich or resource-poor—gains from capital market integration and capital tax competition. We develop a framework involving vertical linkages through resource-based inputs as well as international fiscal linkages between resource-rich and resource-poor countries. Our analysis shows that capital market integration causes capital flows from the latter to the former and thus improves production efficiency and global welfare. However, such gains accrue only to resource-poor countries, and capital mobility might even negatively affect resource-rich countries. In response to capital flows, the governments of both types of countries have an incentive to tax capital. We thus conclude that such taxation enables resource-rich countries to exploit their efficiency gains through capital market integration and become winners in the tax game.
|Date of creation:||Oct 2012|
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- Sato, Yasuhiro & Thisse, Jacques-Francois, 2007.
"Competing for capital when labor is heterogeneous,"
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- SATO, Yasuhiro & THISSE, Jacques-François, "undated". "Competing for capital when labor is heterogeneous," CORE Discussion Papers RP 1992, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Sato, Yasuhiro & Thisse, Jacques-François, 2007. "Competing for Capital When Labour is Heterogeneous," CEPR Discussion Papers 6186, C.E.P.R. Discussion Papers.
- Jacques-François Thisse & Yasuhiro Sato, 2007. "Competing for Capital when Labor is Heterogeneous," Post-Print halshs-00754191, HAL.
- SATO, Yasuhiro & THISSE, Jacques-François, 2005. "Competing for capital when labor is heterogeneous," CORE Discussion Papers 2005061, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Yasuhiro, SATO & Jacques-François, THISSE, 2005. "Competing for capital when labor is heterogeneous," Discussion Papers (ECON - Département des Sciences Economiques) 2005045, Université catholique de Louvain, Département des Sciences Economiques.
- Yasuhiro Sato & Jacques-Francois Thisse, 2006. "Competing for capital when labor is heterogeneous," CIRJE F-Series CIRJE-F-456, CIRJE, Faculty of Economics, University of Tokyo.
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- Hikaru Ogawa & Yasuhiro Sato & Toshiki Tamai, 2010. "Who gains from capital market integration: Tax competition between unionized and non-unionized countries," Discussion Papers in Economics and Business 10-18, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
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- Peter Egger & Tobias Seidel, 2011. "Tax competition, trade liberalization, and imperfect labour markets," Oxford Economic Papers, Oxford University Press, vol. 63(4), pages 722-739, December. Full references (including those not matched with items on IDEAS)
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