Is Direct FDI in Healthcare Desirable in a Developing Economy?
Sarbajit Chaudhuri () and
MPRA Paper from University Library of Munich, Germany
We develop a three-sector general equilibrium model and attempt to examine the impact of FDI in healthcare sector on the welfare and human capital stock of the economy. The greater the size of the healthcare sector the higher and better would be the medical facilities available to each member of the population. Better medical facilities must produce positive effects on workers’ general health and productivity. The greater the size of the healthcare sector the higher is the efficiency of labour. There are two types of capital: capital of type K and capital of type N. While capital of type K is used in production of all the sectors of the economy, capital of type N is specific to the healthcare sector. Our analysis finds that an FDI of capital of type N although raises the human capital formation may lower social welfare. On the contrary, an inflow of foreign capital of type K is likely to be welfare-improving. Although these effects crucially hinge on different structural factors e.g. the degree of labour market imperfection, trade-related and technological factors these can at least question the desirability of allowing the entry of foreign capital in the healthcare sector directly.
Keywords: FDI; healthcare; developing economy; social welfare; human capital; general equilibrium (search for similar items in EconPapers)
JEL-codes: P36 I12 F19 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev, nep-hea and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
https://mpra.ub.uni-muenchen.de/41007/1/MPRA_paper_41007.pdf original version (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:41007
Access Statistics for this paper
More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().