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Targeting Sectors for Foreign Capital Inflow in a Small Developing Economy
Author(s) -
Marjit Sugata`,
Broll Udo,
Mitra Sandip
Publication year - 1997
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/1467-9396.00042
Subject(s) - intermediate good , economics , inflow , capital good , foreign direct investment , unemployment , capital (architecture) , foreign capital , investment (military) , international economics , small open economy , goods and services , open economy , monetary economics , market economy , macroeconomics , production (economics) , monetary policy , exchange rate , history , physics , archaeology , politics , political science , mechanics , law
We argue, in a model with trade and unemployment, that exogenous inflow of foreign capital may deliver the desired result when it flows to a protected intermediate‐goods sector. Whether foreign investment should be directed towards an intermediate‐goods sector or to a final‐goods sector depends on the technological specifications of either type of goods as well as on the existing set of trade policies.