Capital Imports and Tariffs

Masao Oda

Review of International Economics, 2008, vol. 16, issue 2, pages 350-354

Abstract: 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. Copyright © 2007 The Author.

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