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Foreign Capital Inflow, Non-Traded Intermediary, Urban Unemployment And Welfare In A Small Open Economy: A Theoretical Analysis

  • Sarbajit Chaudhuri

    (Dept. of Economics, Calcutta University)

The paper attempts to analyze the implications of foreign capital inflow in a small open economy with a non-traded intermediary on the welfare and urban unemployment in a three- sector Harris-Todaro (1970) framework. The standard immiserizing result of a foreign capital inflow has been found to be valid when the non-traded intermediary is solely used in the protected import-competing sector. However, if the export sector too uses the intermediary the economy may experience an improvement in its welfare and a reduction in the urban unemployment level.

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Paper provided by EconWPA in its series International Trade with number 0511008.

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Length: 11 pages
Date of creation: 11 Nov 2005
Date of revision:
Handle: RePEc:wpa:wuwpit:0511008
Note: Type of Document - pdf; pages: 11
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  1. Marjit, Sugata & Beladi, Seyed Abdolhamid, 1997. "Protection and the gainful effects of foreign capital," Discussion Papers, Series II 334, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
  2. Hamid Beladi & Sugata Marjit, 1992. "Foreign Capital and Protectionism," Canadian Journal of Economics, Canadian Economics Association, vol. 25(1), pages 233-38, February.
  3. Sarbajit Chaudhuri & Ujjaini Mukherjee, 2005. "Removal Of Protectionism, Foreign Investment And Welfare In A Model Of Informal Sector," International Trade 0511009, EconWPA.
  4. Grinols, Earl L, 1991. "Unemployment and Foreign Capital: The Relative Opportunity Costs of Domestic Labour and Welfare," Economica, London School of Economics and Political Science, vol. 58(229), pages 107-21, February.
  5. Brecher, Richard A. & Diaz Alejandro, Carlos F., 1977. "Tariffs, foreign capital and immiserizing growth," Journal of International Economics, Elsevier, vol. 7(4), pages 317-322, November.
  6. Chandra, Vandana & Khan, M Ali, 1993. "Foreign Investment in the Presence of an Informal Sector," Economica, London School of Economics and Political Science, vol. 60(237), pages 79-103, February.
  7. Beladi, Hamid & Marjit, Sugata, 1992. "Foreign capital, unemployment and national welfare," Japan and the World Economy, Elsevier, vol. 4(4), pages 311-317, December.
  8. Sarbajit Chaudhuri & Ujjaini Mukhopadhyay, 2002. "Economic liberalization and welfare in a model with an informal sector," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 10(1), pages 143-172, March.
  9. Khan, M. Ali, 1982. "Tariffs, foreign capital and immiserizing growth with urban unemployment and specific factors of production," Journal of Development Economics, Elsevier, vol. 10(2), pages 245-256, April.
  10. Gupta, Manash Ranjan, 1997. "Foreign Capital and the Informal Sector: Comments," Economica, London School of Economics and Political Science, vol. 64(254), pages 353-63, May.
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