The Impact of Financial Constraints and Wealth Inequality on International Trade Flows, Capital Movements and Entrepreneurial Migration

Spiros Bougheas and Rodney Falvey

No 2014-04, Discussion Papers from University of Nottingham, GEP

Abstract: We introduce financial frictions into a simple two sector model of international trade with heterogeneous agents and investigate the impact of differences in the strength of financial institutions and wealth inequality on trade flows, capital movements and entrepreneurial migration. Distinct cost-cutting and career-changing motives for entrepreneurial migration exist, which can lead to two-way entrepreneurial flows. We establish presumptions that countries with stronger financial systems or greater wealth inequality will export the output of the financially dependent sector, will import capital and will be a (net) exporter of entrepreneurs. Important exceptions are shown.

Keywords: entrepreneurial migration; trade flows; capital flows; wealth inequality; financial frictions (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-ent, nep-int, nep-mig and nep-opm
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Related works:
Working Paper: The Impact of Financial Constraints and Wealth Inequality on International Trade Flows, Capital Movements and Entrepreneurial Migration (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:not:notgep:14/04

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