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Capital mobility ? a resource curse or blessing? How, when, for whom?


  • Hikaru Ogawa

    () (Graduate School of Economics, Nagoya University (Japan))

  • Jun Oshiro

    () (Graduate School of Economics, Osaka University (Japan))

  • Yasuhiro Sato

    () (Graduate School of Economics, Osaka University (Japan))


This paper investigates which of the two countries \resource-rich or resourcepoor \ gains from capital market integration and capital tax competition. We develop a framework involving vertical linkages via 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 resourcepoor countries to resource-rich countries and thus improves production efficiency and global welfare. However, such gains accrue only to resource-poor countries, and capital mobility might even hurt resource-rich countries. In response to capital flows, the governments of both resource-rich and resource-poor countries have an incentive to tax capital. Such taxations would enable resource-rich countries to exploit their efficiency gains through capital market integration and become winners in the tax game.

Suggested Citation

  • Hikaru Ogawa & Jun Oshiro & Yasuhiro Sato, 2012. "Capital mobility ? a resource curse or blessing? How, when, for whom?," Discussion Papers in Economics and Business 12-05, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
  • Handle: RePEc:osk:wpaper:1205

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    References listed on IDEAS

    1. Adam Gersl & Tomás Holub, 2006. "Foreign Exchange Interventions Under Inflation Targeting: The Czech Experience," Contemporary Economic Policy, Western Economic Association International, vol. 24(4), pages 475-491, October.
    2. Nobuyuki Oda & Kazuo Ueda, 2007. "The Effects Of The Bank Of Japan'S Zero Interest Rate Commitment And Quantitative Monetary Easing On The Yield Curve: A Macro-Finance Approach," The Japanese Economic Review, Japanese Economic Association, vol. 58(3), pages 303-328.
    3. Jung, Taehun & Teranishi, Yuki & Watanabe, Tsutomu, 2005. "Optimal Monetary Policy at the Zero-Interest-Rate Bound," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 37(5), pages 813-835, October.
    4. Takatoshi Ito, 2005. "Interventions and Japanese economic recovery," International Economics and Economic Policy, Springer, vol. 2(2), pages 219-239, November.
    5. Rasmus Fatum & Michael M. Hutchison, 2005. "Foreign Exchange Intervention and Monetary Policy in Japan, 2003-2004," Hi-Stat Discussion Paper Series d05-93, Institute of Economic Research, Hitotsubashi University.
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    More about this item


    capital market integration; natural resource; resource curse; tax competition;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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