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Journal of Economic Integration 2002 June;17(2) :262-272.
Foreign Capital, Processing Incentives, and Urban Unemployment

John Gilbert Thomas Wahl 

Utah State University
Washington State University
Copyright ©2002 Journal of Economic Integration
We use a general equilibrium model of a small developing economy with urban unemployment to illustrate the impact of processing incentives in the presence of foreign owned factors of production. We show that the location of the processing industry plays a crucial role in determining whether or not processing incentives will raise welfare through employment effects, but, once stability conditions are imposed, does not alter the positive investment terms-of-trade effect resulting from foreign ownership of resources.
Keywords: f
1. Chao, C-C. and Yu, E.S.H. (1999), "Export Promotion, Sectoral Unemployment, and National Welfare" International Economic Journal 13(4):1-15.
2. Marjit, S., Broll, U. and Mitra, S. (1997), "Targeting Sectors for Foreign Capital Inflow in a Small Developing Economy" Review of International Economics 5(1):101-6.
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