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Foreign capital inflows and welfare in an economy with imperfect competition

journal contribution
posted on 1994-10-01, 00:00 authored by Chi-Chur Chao, E S H Yu
This paper examines the resource allocational and welfare effects of exogenous inflows of foreign capital in a general-equilibrium model with oligopolistic competition and unemployment. Although the welfare impact for the short run is ambiguous and dependent upon the strength of excess profits and scale economies relative to unemployment in manufacturing, in the long run additional inflows of foreign capital always improve national welfare with capital mobility. Hence, attracting foreign capital remains a sound policy for economies characterized by imperfect competition, scale economies, and regional unemployment.

History

Journal

Journal of development economics

Volume

45

Issue

1

Pagination

141 - 154

Publisher

Elsevier Science BV

Location

Amsterdam, The Netherlands

ISSN

0304-3878

Language

eng

Publication classification

C1.1 Refereed article in a scholarly journal

Copyright notice

1994, Elsevier Science B.V.

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