THE POSSIBILITY OF WELFARE GAINS WITH CAPITAL INFLOWS IN A SMALL TARIFF-RIDDEN ECONOMY

Partha Sen, Arghya Ghosh and Abheek Barman
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Partha Sen: Delhi School of Economics
Abheek Barman: Delhi School of Economics

No 9, Working papers from Centre for Development Economics, Delhi School of Economics

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.

Pages: 19 pages
Date: 1994-06
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Related works:
Journal Article: The Possibility of Welfare Gains with Capital Inflows in a Small Tariff‐Ridden Economy (1997)
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