Foreign Capital Inflow, Non-Traded Intermediary, Urban Unemployment and Welfare in a Small Open Economy: a Note

2002 ◽  
Author(s):  
Sarbajit Chaudhuri
Keyword(s):  
Open Economy ◽  
Foreign Capital ◽  
Small Open Economy ◽  
Capital Inflow ◽  
Urban Unemployment

scholarly journals Foreign Capital Inflow, Non-traded Intermediary, Urban Unemployment, and Welfare in a Small Open Economy: A Theoretical Analysis

2001 ◽  
Vol 40 (3) ◽  
pp. 225-235 ◽  
Author(s):  
Sarbajit Chaudhuri
Keyword(s):  
Theoretical Analysis ◽  
Open Economy ◽  
Foreign Capital ◽  
Small Open Economy ◽  
Capital Inflow ◽  
Export Sector ◽  
Urban Unemployment

The paper attempts to analyse the implications of foreign capital inflow in a small open economy with a non-traded intermediary on the welfare and urban unemployment in a three-sector Harris-Todaro (1970) framework. The standard immiserising result of a foreign capital inflow has been found to be valid when the non-traded intermediary is solely used in the protected import-competing sector. However, if the export sector too uses the intermediary, the economy may experience an improvement in its welfare and a reduction in the urban unemployment level.

scholarly journals Foreign Capital Inflow, Technology Transfer, and National Income

2001 ◽  
Vol 40 (1) ◽  
pp. 49-56 ◽  
Author(s):  
Sarbajit Chaudhuri
Keyword(s):  
Technology Transfer ◽  
Open Economy ◽  
Foreign Capital ◽  
Full Employment ◽  
Small Open Economy ◽  
National Income ◽  
Capital Inflow ◽  
Short Paper ◽  
Export Sector ◽  
Output Ratio

According to Jones and Marjit (1992), in a two-sector, full-employment model it is not possible to show that growth in the foreign capital employed in the export sector of a small open economy will lead to a fall in the welfare in the presence of a protected import-competing sector. In this short paper, we have shown that one may get the immiserising result even in this framework if the inflow of foreign capital into the export sector is accompanied by technology transfer, which leads to a fall in the labour-output ratio in this sector.

Wage Inequality and Unemployment in the Presence of Imported Intermediate Goods: A Theoretical Analysis

2021 ◽  
pp. 001573252098689
Author(s):  
Priya Brata Dutta ◽  
Nirjhar Ghosh
Keyword(s):  
Wage Inequality ◽  
Open Economy ◽  
Service Sector ◽  
Agricultural Sector ◽  
Small Open Economy ◽  
Capital Inflow ◽  
Intermediate Goods ◽  
Jel Codes ◽  
Unskilled Labour ◽  
Critical Policy

This article develops a static three-sector and five-factor competitive general equilibrium model of a small open economy: sector 1 is the rural agricultural sector, which produces products using informal or unorganised unskilled labour and land as inputs; sector 2 is the urban manufacturing, final-goods-producing sector that produces products with the help of unskilled labour, who get unionised wages, and capital; and sector 3 is the service sector, which uses skilled labour with formal wages, capital and sophisticated hi-technology-intensive imported intermediate goods produced abroad as inputs. We show that an exogenous increase in capital inflow or an increase in tariff on imported intermediate input reduces the skilled–unskilled wage inequality and lowers unemployment as long as the return to capital is unaltered and output adjustments absorb the entire shock of the two policies. Such capital inflow increases rural wage and reduces unemployment via the Harris Todaro mechanism but interestingly does not allow the skilled wage to increase. Thus, two critical policy targets can be accommodated at the same time. JEL Codes: F13, J31, J46

A small open economy model with transaction costs in foreign capital

2000 ◽  
Vol 44 (8) ◽  
pp. 1515-1541 ◽  
Author(s):  
Tryphon Kollintzas ◽  
Vanghelis Vassilatos
Keyword(s):  
Transaction Costs ◽  
Open Economy ◽  
Foreign Capital ◽  
Small Open Economy ◽  
Economy Model

The long-run stability of a small, open economy under crawling peg regime

2002 ◽  
Vol 52 (1) ◽  
pp. 57-78
Author(s):  
S. Çiftçioğlu
Keyword(s):  
Exchange Rate ◽  
Open Economy ◽  
Risk Premium ◽  
Small Open Economy ◽  
Exchange Rate Policy ◽  
Price Stability ◽  
Output Stability ◽  
Long Run ◽  
The Exchange Rate ◽  
The Impact

The paper analyses the long-run (steady-state) output and price stability of a small, open economy which adopts a “crawling-peg” type of exchange-rate regime in the presence of various kinds of random shocks. Analytical and simulation results suggest that with the exception of money demand shocks, an exchange rate policy which involves a relatively higher rate of indexation of the exchange rate to price level is likely to lead to the worsening of price stability for all types of shocks. On the other hand, the impact of adopting such a policy on output stability depends on the type of the shock; for policy shocks to the exchange rate and shocks to output demand, output stability is worsened whereas for the shocks to risk premium of domestic assets, supply price of domestic output and the wage rate, better output stability is achieved in the long run.

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