Open AccessForeign Capital Inflow, Non-traded Intermediary, Urban Unemployment, and Welfare in a Small Open Economy: A Theoretical Analysis
Author(s) -
Sarbajit Chaudhuri
Publication year - 2001
Publication title -
pakistan development review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.154
H-Index - 26
ISSN - 0030-9729
DOI - 10.30541/v40i3pp.225-235
Subject(s) - unemployment , inflow , foreign capital , economics , welfare , small open economy , capital (architecture) , open economy , capital outflow , labour economics , capital flows , monetary economics , economy , international economics , macroeconomics , market economy , foreign direct investment , capital formation , financial capital , human capital , monetary policy , exchange rate , liberalization , history , physics , archaeology , mechanics
The paper attempts to analyse the implications of foreigncapital inflow in a small open economy with a non-traded intermediary onthe welfare and urban unemployment in a three-sector Harris-Todaro(1970) framework. The standard immiserising result of a foreign capitalinflow has been found to be valid when the non-traded intermediary issolely used in the protected import-competing sector. However, if theexport sector too uses the intermediary, the economy may experience animprovement in its welfare and a reduction in the urban unemploymentlevel.