FDI, Unemployment, and Welfare in the Presence of Agricultural Dualism: A Three-Sector General Equilibrium Model

Rakhi Banerjee and Ranjanendra Narayan Nag
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Rakhi Banerjee: Department of Economics, Gurudas College, Kolkata, India
Ranjanendra Narayan Nag: Department of Economics, St. Xavier’s College (Autonomous), Kolkata, India

The Pakistan Development Review, 2010, vol. 49, issue 2, 119–128

Abstract: The present paper uses a three-sector general equilibrium framework to examine the effect of Foreign Direct Investment (FDI) on unemployment and welfare in labour-surplus economies in the post-globalisation era. We show that the expansion of land-hungry export-oriented agricultural sector through FDI accentuates the problem of urban unemployment in the presence of sticky urban wage and agricultural dualism. We also note that multiple cross-effects and factor specificity play an important role in determining change in output composition and welfare in the wake of the inflow of foreign capital.

Keywords: Agricultural Dualism; FDI; Unemployment; Welfare (search for similar items in EconPapers)
JEL-codes: F16 F21 (search for similar items in EconPapers)
Date: 2010
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