The Possibility of Welfare Gains with Capital Inflows in a Small Tariff‐Ridden Economy | Zendy

Sen Partha | Zendy; Ghosh Arghya | Zendy; Barman Abheek | Zendy

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The Possibility of Welfare Gains with Capital Inflows in a Small Tariff‐Ridden Economy

Author(s) -

Sen Partha,

Ghosh Arghya,

Barman Abheek

Publication year - 1997

Publication title -

economica

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 1.532

H-Index - 65

eISSN - 1468-0335

pISSN - 0013-0427

DOI - 10.1111/1468-0335.00082

Subject(s) - tariff , economics , imperfect competition , capital (architecture) , welfare , repatriation , small open economy , capital intensity , revenue , competition (biology) , monetary economics , international economics , market economy , microeconomics , human capital , finance , exchange rate , ecology , archaeology , biology , history

Capital inflows with full repatriation give rise to welfare improvement possibilities in a small tariff‐distorted economy when imperfect competition and increasing returns are allowed for in one sector of a two‐sector model. This is in contrast to the Brecher–Alejandro proposition that capital inflows with full repatriation are necessarily immiserizing for a small tariff‐ridden economy. We find that welfare gains chances are greater (a) the higher the expenditure share of the capital‐intensive differentiated good; (b) the lower the substitutability between brands; and (c) the lower the share of tariff revenue in national income.

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