Trade and Gains from Trade Between Profit-maximizing and Labour-managed Countries with Imperfect Competition

This paper offers a theoretical analysis of trade and the gains from trade in general equilibrium under imperfect competition by assuming that all firms in one country are of the labour-managed type (maximizing the income of labour) while those in the other country are of the profit-maximizing type. Our main conclusion is that if the labour-managed country is larger than or equal to the profit-maximizing country, the profit-maximizing country exports the imperfectly competitive commodity and gains from trade while the labour-managed country exports the perfectly competitive commodity and may lose from trade.     

Direct Investment, Monopoly and Welfare

This paper considers foreign direct investment which produces a manufactured good entirely for the market of the host country. It analyzes the welfare implications of an expansion of this activity, and compares the results with ones obtained from the model of export processing zones. It is shown that, contrary to the case of EPZs, an expansion of market-oriented direct investment improves welfare under free trade, and if there is an import tariff, the expansion may improve welfare under certain conditions.     

Non-traded inputs,interindustry flows,resource allocation and the ERP theory

This paper investigates the movement of gross outputs and resource allocation under the condition allowing for substitutability among various inputs within the framework of a simple general equilibrium model with both non-traded intermediate inputs and interindustry flows. Particular attention is paid to the sufficient conditions under which the gross output of the protected industry goes up and the industry attracts domestic factors under the Bhagwati-Srinivasan restriction on tariff change.     

Local content requirements and urban unemployment

Local content requirements (LCRs) are extensively employed in many developing countries that intend to develop the domestic intermediate good sectors as well as the final good sectors. This article investigates the effects of LCRs on the domestic intermediate-good-producing sector, urban unemployment, and welfare.     

Urban unemployment, informal sector and development policies

We analyze the effects of wage subsidy policies on unemployment and welfare in the model that is characterized by the existence of both open unemployment and the informal sector that producesfinal goods. Our main findings are as follows. Wage subsidies to the agricultural and informal sectors increase welfare and decrease urban unemployment. The effects of a wage subsidy to manufacturing sector on welfare and unemployment are conditional. We identify some sufficient conditions for the definite results and interpret them.     

Unemployment and International Factor Movement in the Presence of Skilled and Unskilled Labor

Widespread unemployment has been observed in some developing countries. On the other hand, extensive movement of labor across countries has also been observed. Therefore, in order to examine the interaction between the domestic and international labor markets, this paper develops a model that includes unemployment, international factor movement, and the difference between skilled and unskilled labor. The model examines the effect of production subsidies on unemployment and evaluates their effectiveness as a possible policy in order to alleviate the problem of unemployment. Further, this paper investigates the effects of international factor movement on unemployment and welfare.     

Formation of special economic zone,liberalized FDI policy and agricultural productivity

Formation of Special Economic Zone (SEZ) using agricultural land to promote industrialization has recently been one of the most controversial policy issues in many developing economies including India. This paper critically evaluates the consequences of this policy in terms of a three-sector Harris–Todaro type general equilibrium model characterizing a typical developing economy. It finds that agriculture and SEZ can grow simultaneously provided the government spends a substantial amount of its resources on irrigation projects and other infrastructural development designed at improving the efficiency of land. Agricultural wage and aggregate employment in the economy may also improve owing to this policy.     

Export Processing Zones, Backward Linkages, and Variable Returns to Scale

This paper investigates the effects of forming export processing zones on factor rewards, national income, and the intermediate-good-producing sector under variable returns to scale (VRS). It is shown that the results obtained in the model under constant returns to scale are substantially modified if VRS is incorporated into the model.     

Can International Factor Mobility Reduce Wage Inequality in a Dual Economy?*

This paper analyzes the consequences of international factor movements on the skilled–unskilled wage inequality in a dual‐economy set‐up that includes unemployment and three intersectorally mobile factors of production—unskilled labor, skilled labor, and capital. Thus far, theoretical literature on this subject has adopted the full‐employment framework and hence ignored the problem of unemployment. The analysis in this paper reveals that the results crucially depend on the difference in the intersectoral factor intensities between skilled labor and capital. In particular, it demonstrates the existence of a possibility of deterioration in wage inequality following foreign unskilled‐labor inflow.     

Imperfect Labor Mobility and Unemployment in a Dual Economy*

This paper examines the implications of imperfect labor mobility and unemployment in developing countries. We analyze the effects of wage subsidy policies, factor growth, and the change in labor mobility on unemployment and national income in an economy that is characterized by the existence of both imperfect labor mobility and urban unemployment.