Profit-Sharing and International Capital Mobility in Developing Countries

Chi-Chur Chao and Eden Yu

Review of International Economics, 1999, vol. 7, issue 4, 744-52

Abstract: This paper uses a general equilibrium model incorporating rural-urban migration to analyze and contrast the short- and long-run effects of profit-sharing. Specifically examined are the effects of profit-sharing on rural-urban migration, the degree of competition among urban firms, and international mobility of capital. It is found that although profit-sharing may raise urban employment in the short run, the scheme reduces urban employment and lowers the inflow of foreign capital in the long run. Copyright 1999 by Blackwell Publishing Ltd.

Date: 1999
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