Welfare Enhancing Capital Imports
Masao Oda (),
Koji Shimomura and
Ryuhei Wakasugi ()
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Masao Oda: Ritsumeikan University and University of Shimane
No 641, KIER Working Papers from Kyoto University, Institute of Economic Research
This paper provides a model to consider the conditions under which an acceptance of foreign capital is welfare enhancing in a multi-commodity multi-factor framework. Contrary to the pessimistic conventional wisdom of capital imports and welfare, we provide a justification for the acceptance of foreign capital and the diversification of industrial structure in developing countries. A sufficient condition for the acceptance of foreign capital to be welfare enhancing is that all domestic factors move into the new export sector in equal proportion to the endowments of factors.
Keywords: foreign capital; export sector; tariff revenue; welfare (search for similar items in EconPapers)
JEL-codes: F11 F21 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:kyo:wpaper:641
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