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

Partha Sen, Arghya Ghosh and Abheek Barman

Economica, 1997, vol. 64, issue 254, 345-352

Abstract: 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.

Date: 1997
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https://doi.org/10.1111/1468-0335.00082

Related works:
Working Paper: THE POSSIBILITY OF WELFARE GAINS WITH CAPITAL INFLOWS IN A SMALL TARIFF-RIDDEN ECONOMY (1994)
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