Trade, FDI and Congestion - the Small and very Open Economy

Kristof Dascher

No 2526, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Typically, a small and open economy trades goods at given world prices. Here, we present a model of a very open small economy, where capital and labour are internationally mobile, too. When investing into infrastructure, the economy?s government attracts not only mobile capital but mobile labour, too. These capital and labour inflows into the economy reinforce each other. They contribute to rising welfare for land owning indigenous households. But all potential benefits for land renting immigrant households are capitalized into higher land rents. The paper is also an attempt to give an account of the recent economic boom in Ireland.

Keywords: Foreign direct investment; Small open economy; Open city (search for similar items in EconPapers)
JEL-codes: F11 F23 R23 (search for similar items in EconPapers)
Date: 2000-08
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Citations: View citations in EconPapers (4)

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Working Paper: Trade, FDI and Congestion: the Small and Very Open Economy (2000)
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