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Foreign Direct Investment, Infrastructure and the Welfare Effects of Labour Migration

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  • Frank Barry

Abstract

A model of a small open economy with open capital and labour markets is presented. Labour demand is based on capital mobility and increasing returns in production. Migration decisions are based on the relative attractiveness of regions in terms of the stock of infrastructure, including its tax cost and the degree of congestion, and the level of wages prevailing. Equilibria are not Pareto efficient because individuals do not take account of the impact of their actions on the level of wages prevailing, the extent of the tax base to finance infrastructural provision, or the degree of congestion. The model generates new insights into a range of policy issues that surfaced over the course of the recent Irish boom.

Suggested Citation

  • Frank Barry, 2002. "Foreign Direct Investment, Infrastructure and the Welfare Effects of Labour Migration," Manchester School, University of Manchester, vol. 70(3), pages 364-379, June.
    • Handle: RePEc:bla:manchs:v:70:y:2002:i:3:p:364-379
    DOI: 10.1111/1467-9957.00307
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    Cited by:

    1. Kristof Dascher, 2015. "Foreign Direct Investment into Open and Closed Cities," Scottish Journal of Political Economy, Scottish Economic Society, vol. 62(2), pages 191-210, May.
    2. Garas, Antonios & Lapatinas, Athanasios & Poulios, Konstantinos, 2015. "The complex-network based relation between migration and FDI in the OECD," MPRA Paper 68341, University Library of Munich, Germany.
    3. Antonios Garas & Athanasios Lapatinas & Konstantinos Poulios, 2016. "The Relation Between Migration And Fdi In The Oecd From A Complex Network Perspective," Advances in Complex Systems (ACS), World Scientific Publishing Co. Pte. Ltd., vol. 19(06n07), pages 1-20, September.
    4. Pero PETROVIĆ & Slobodan ČEROVIĆ, 2011. "The Characteristics of Foreign Direct Investments in Serbia," Journal of Knowledge Management, Economics and Information Technology, ScientificPapers.org, vol. 1(6), pages 1-12, October.

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