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Capital Imports and Tariffs
Author(s) -
Oda Masao
Publication year - 2008
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/j.1467-9396.2007.00715.x
Subject(s) - tariff , economics , welfare , international economics , capital (architecture) , revenue , repatriation , monetary economics , foreign capital , international trade , foreign direct investment , macroeconomics , market economy , finance , archaeology , history
This paper develops a three‐sector, three‐factor specific factor model with a tariff and presents conditions under which capital imports and tariffs can be welfare enhancing in a developing country. The impact on welfare depends on the tariff revenue effect and the repatriation effect. A capital import is welfare enhancing if it reduces the domestic output of imports. A tariff is welfare enhancing only if it reduces the return to foreign capital.