Abstract
We consider an urban foreign enclave with sector-specific foreign capital in an otherwise mobile-capital Harris-Todaro model. We consider the taxation of foreign capital. A dynamic version of this model is considered. The long-run equilibrium and the comparative steady-state effects are analyzed. We get some interesting effects of reduction in tax rate on foreign capital on the short-run and the long-run equilibrium levels of domestic factor income and national income under some meaningful conditions.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Bandyopadhyay, M., and Gupta, M. R. (1995): “Development Policies in the Presence of an Informal Sector: a Note.”Journal of Economics/Zeitschrift für Nationalökonomie 61: 301–315.
Basu, A. K. (1996): “Unemployment Reduction in the Presence of a Rural Based Free Trade Zone: Some Policy Implications”.Journal of Economic Integration 11: 453–477.
Batra, R. N. and Casas, F. R. (1976): “A Synthesis of the Heckscher-Ohlin and the Neo-classical Models of International Trade”.Journal of International Economics 6: 21–38.
Beladi, H., and Marjit, S. (1992a): “Foreign Capital and Protectionism.”Canadian Journal of Economics 25: 233–238.
— (1992b): “Foreign Capital, Unemployment and National Welfare”.Japan and the World Economy 4: 311–317.
Chandra, V., and Khan, M. A. (1993): “Foreign Investment in the Presence of an Informal Sector.”Economica 60: 79–103.
Corden, W. M., and Findlay, R. (1975): “Urban Unemployment, Intersectoral Capital Mobility and Development Policy.”Economica 29: 59–78.
Datta Chaudhuri, T., and Adhikari, S. (1993): “Free Trade Zones with Harris-Todaro Unemployment: a Note on Young-Miyagiwa.”Journal of Development Economics 41: 159–167.
Grinols, E. L. (1991): “Unemployment and Foreign Capital: the Relative Opportunity Costs of Domestic Labour and Welfare.”Economica 57: 107–122.
Gupta, M. R. (1994): “Duty-free Zone, Unemployment, and Welfare: a Note.”Journal of Economics/Zeitschrift für Nationalökonomie 59: 217–236.
— (1995): “Tax on Foreign Capital Income and Wage Subsidy to the Urban Sector in the Harris-Todaro Model.”Journal of Development Economics 47: 469–479.
Hamada, K. (1974): “An Economic Analysis of the Duty-free Zone.”Journal of International Economics 4: 225–241.
Hamilton, C., and Svensson, L. O. (1982): “On the Welfare Effects of a Duty Free Zone.”Journal of International Economics 13: 45–64.
Harris, J. R., and Todaro, M. P. (1970): “Migration, Unemployment, and Development: a Two-sector Analysis.”American Economic Review 60: 126–142.
Jones, R. W. (1965): “The Structure of Simple General Equilibrium Models.”Journal of Political Economy 73: 551–572.
— (1971): “A Three-factor Model in Theory, Trade and History.” InTrade Balance of Payments and Growth, edited by J. Bhagwati, R. W. Jones, R. Mundell, and J. Vanek. Amsterdam: North-Holland.
Jones, R. W., and Easton, S. T. (1983): “Factor Intensities and Factor Substitution in General Equilibrium.”Journal of International Economics 15: 65–99.
Khan, M. A. (1980): “The Harris-Todaro Hypothesis and the Heckscher-Ohlin-Samuelson Trade Model: a Synthesis.”Journal of International Economics 10: 527–547.
— (1982). “Tariffs, Foreign Capital and Immiserizing Growth with Urban Unemployment and Specific Factors of Production.”Journal of Development Economics 10: 245–256.
Lucas, R. E. (1988): “On the Mechanics of Economic Development.”Journal of Monetary Economics 22: 3–42.
Marjit, S. (1994): “On the Participation of Local Capital in a Foreign Enclave: a General Equilibrium Analysis.”Journal of Economic Integration 9: 489–501.
Romer, P. (1986): “Increasing Returns and Long-run Growth.”Journal of Political Economy 94: 1002–1037.
Young, L. (1987): “Intermediate Goods and the Formation of Duty-free Zones.”Journal of Development Economics 25: 369–384.
— (1992): “Unemployment and the Optimal Export Processing Zone.”Journal of Development Economics 37: 369–385.
Young, L., and Miyagiwa, K. (1987): “Unemployment and the Formation of Duty Free Zones.”Journal of Development Economics 26: 397–405.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Gupta, K., Gupta, M.R. Foreign enclaves and economic development: A theoretical analysis. Journal of Economics Zeitschrift für Nationalökonomie 67, 317–336 (1998). https://doi.org/10.1007/BF01234648
Received:
Revised:
Issue Date:
DOI: https://doi.org/10.1007/BF01234648
Keywords
- foreign enclave
- migration
- national income
- tax on foreign capital
- long-run equilibrium
- comparative steady state