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Reconsideration of Some Paradoxes in the Theory of Optimal Foreign Investment

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  • MICHIHIRO OHYAMA

Abstract

The paper re‐examines some ‘paradoxical’ propositions on optimal foreign investment discussed by Negishi and Long in the context of growing international economies. It demonstrates the following rather critical conclusions:first, the unusual message of the Negishi‐Long paradoxes derives essentially from the requirement of growth equilibria rather than that of optimality; second, one of the paradoxes, attributable to Long, is at best a characterization of local optimum and, therefore, completely misleading as a policy recommendation:and thirdly, an appropriate change of standard of references would dissolve the Negishi‐Long paradoxes and reveal a neglected true paradox of the model.

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  • Michihiro Ohyama, 1978. "Reconsideration of Some Paradoxes in the Theory of Optimal Foreign Investment," The Economic Record, The Economic Society of Australia, vol. 54(3), pages 346-353, December.
    • Handle: RePEc:bla:ecorec:v:54:y:1978:i:3:p:346-353
    DOI: 10.1111/j.1475-4932.1978.tb01636.x
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    References listed on IDEAS

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    1. Ronald W. Jones, 1967. "International Capital Movements and the Theory of Tariffs and Trade," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 81(1), pages 1-38.
    2. Murray C. Kemp, 1962. "Foreign Investment And The National Advantage," The Economic Record, The Economic Society of Australia, vol. 38(81), pages 56-62, March.
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