1997/05/01 by Partha Sen, Arghya Ghosh, Abheek Barman
Economics, Econometrics and Finance · #Fiscal Policy and Economic Growth #Global trade and economics #Taxation and Compliance Studies
paper · doi:10.1111/1468-0335.00082
Capital inflows with full repatriation give rise to welfare improvement possibilities in a small tariff‐distorted economy when imperfect competition and increasing returns are allowed for in one sector of a two‐sector model. This is in contrast to the Brecher–Alejandro proposition that capital inflows with full repatriation are necessarily immiserizing for a small tariff‐ridden economy. We find that welfare gains chances are greater (a) the higher the expenditure share of the capital‐intensive differentiated good; (b) the lower the substitutability between brands; and (c) the lower the share of tariff revenue in national income.