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Economic Reform, Skill Formation and Foreign Capital
Author(s) -
Kar Saibal,
GuhaKhasnobis Basudeb
Publication year - 2006
Publication title -
world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/j.1467-9701.2006.00759.x
Subject(s) - economics , liberalization , capital outflow , wage , capital (architecture) , wage inequality , labour economics , foreign capital , inflow , foreign direct investment , incentive , capital deepening , capital formation , monetary economics , market economy , human capital , financial capital , macroeconomics , archaeology , history , physics , mechanics
Does trade liberalisation promote skill formation and positively influence the inflow of foreign capital in an economy? How do incentives offered to foreign capital affect skill formation and skilled‐unskilled wage inequality? Is liberalisation of agricultural exports counterproductive to skill formation and foreign capital inflow in the economy? We try to capture these relationships between foreign capital and skill formation in a small open economy facing various exogenous shocks. Among other results, we show that import liberalisation increases skill formation and the inflow of foreign capital in the country. We explore the evolving state of the skilled‐unskilled wage gap in a regime of greater skill formation.