IDEAS home Printed from https://ideas.repec.org/a/bla/worlde/v29y2006i1p79-94.html
   My bibliography  Save this article

Economic Reform, Skill Formation and Foreign Capital

Author

Listed:
  • Saibal Kar
  • Basudeb Guha‐Khasnobis

Abstract

Does trade liberalisation promote skill formation and positively influence the inflow of foreign capital in an economy? How do incentives offered to foreign capital affect skill formation and skilled‐unskilled wage inequality? Is liberalisation of agricultural exports counterproductive to skill formation and foreign capital inflow in the economy? We try to capture these relationships between foreign capital and skill formation in a small open economy facing various exogenous shocks. Among other results, we show that import liberalisation increases skill formation and the inflow of foreign capital in the country. We explore the evolving state of the skilled‐unskilled wage gap in a regime of greater skill formation.

Suggested Citation

  • Saibal Kar & Basudeb Guha‐Khasnobis, 2006. "Economic Reform, Skill Formation and Foreign Capital," The World Economy, Wiley Blackwell, vol. 29(1), pages 79-94, January.
    • Handle: RePEc:bla:worlde:v:29:y:2006:i:1:p:79-94
    DOI: 10.1111/j.1467-9701.2006.00759.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1467-9701.2006.00759.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1467-9701.2006.00759.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Nunnenkamp, Peter & Spatz, Julius, 2003. "Foreign direct investment and economic growth in developing countries: how relevant are host-country and industry characteristics?," Kiel Working Papers 1176, Kiel Institute for the World Economy (IfW Kiel).
    2. Robert C. Feenstra & Gene M. Grossman & Douglas A. Irwin (ed.), 1996. "The Political Economy of Trade Policy: Papers in Honor of Jagdish Bhagwati," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061864, April.
    3. Bryan K. Ritchie, 2002. "Foreign Direct Investment and Intellectual Capital Formation in Southeast Asia," OECD Development Centre Working Papers 194, OECD Publishing.
    4. David Greenaway & Douglas R. Nelson (ed.), 2001. "Globalization and Labour Markets," Books, Edward Elgar Publishing, volume 0, number 1803.
    5. Archanun Kohpaiboon, 2003. "Foreign trade regimes and the FDI-Growth Nexus: a case study of Thailand," Journal of Development Studies, Taylor & Francis Journals, vol. 40(2), pages 55-69.
    6. Matthew J. Slaughter, 2002. "Skill Upgrading in Developing Countries: Has Inward Foreign Direct Investment Played a Role?," OECD Development Centre Working Papers 192, OECD Publishing.
    7. Nigel Driffield & Karl Taylor, 2002. "Spillovers from FDI and Skill Structures of Host-Country Firms," Discussion Papers in Economics 02/4, Division of Economics, School of Business, University of Leicester.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Pengqing Zhang, 2019. "Skill formation, environmental pollution, and wage inequality," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 62(2), pages 405-424, April.
    2. Pi, Jiancai & Zhou, Yu, 2014. "Foreign capital, public infrastructure, and wage inequality in developing countries," International Review of Economics & Finance, Elsevier, vol. 29(C), pages 195-207.
    3. Kar, Saibal, 2008. "Migrant remittances in the state of Kerala, India," MPRA Paper 103805, University Library of Munich, Germany.
    4. Chaitali Sinha, 2017. "International Migration and Welfare Implications," South Asian Journal of Macroeconomics and Public Finance, , vol. 6(2), pages 209-229, December.
    5. Pan, Lijun, 2014. "The impacts of education investment on skilled–unskilled wage inequality and economic development in developing countries," Economic Modelling, Elsevier, vol. 39(C), pages 174-181.
    6. Pi, Jiancai & Zhou, Yu & Yin, Jun, 2013. "International factor mobility, monopolistic competition, and wage inequality," Economic Modelling, Elsevier, vol. 33(C), pages 326-332.
    7. Kuo‐Hsing Kuo & Shang‐Fen Wu & Cheng‐Te Lee, 2022. "The impact of environmental policy on wage inequality," International Journal of Economic Theory, The International Society for Economic Theory, vol. 18(4), pages 472-485, December.
    8. Pi, Jiancai & Zhang, Pengqing, 2017. "Foreign capital, pollution control, and wage inequality in developing countries," International Review of Economics & Finance, Elsevier, vol. 48(C), pages 280-288.
    9. Pan, Lijun & Zhou, Yu, 2013. "International factor mobility, environmental pollution and skilled–unskilled wage inequality in developing countries," Economic Modelling, Elsevier, vol. 33(C), pages 826-831.
    10. Beladi, Hamid & Marjit, Sugata & Weiher, Kenneth, 2011. "An analysis of the demand for skill in a growing economy," Economic Modelling, Elsevier, vol. 28(4), pages 1471-1474, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Saibal Kar & Chaitali Sinha, 2014. "Sectoral Technical Progress and Aggregate Skill Formation," Journal of Industry, Competition and Trade, Springer, vol. 14(2), pages 159-172, June.
    2. Teixeira, Aurora A.C. & Tavares-Lehmann, Ana Teresa, 2014. "Human capital intensity in technology-based firms located in Portugal: Does foreign ownership matter?," Research Policy, Elsevier, vol. 43(4), pages 737-748.
    3. repec:spo:wpecon:info:hdl:2441/10184 is not listed on IDEAS
    4. Thierry Mayer, 2006. "Policy Coherence for Development: A Background Paper on Foreign Direct Investment," OECD Development Centre Working Papers 253, OECD Publishing.
    5. Rajneesh Narula, 2004. "Understanding absorptive capacities in an "innovation systems" context consequences for economic and employment growth," DRUID Working Papers 04-02, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    6. Narula, Rajneesh. & Marín, Anabel., 2005. "Foreign direct investment spillovers, absorptive capacities and human capital development : evidence from Argentina," ILO Working Papers 993782123402676, International Labour Organization.
    7. Chan Sok GEE & Mohd Zaini Abd KARIM, 2011. "Fdi´S Country Of Origin And Output Growth: The Case Of Malaysia?S Manufacturing Sector, 1991-2006," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 11(1).
    8. repec:hal:wpspec:info:hdl:2441/10184 is not listed on IDEAS
    9. Veasna Kheng & Sizhong Sun & Sajid Anwar, 2017. "Foreign direct investment and human capital in developing countries: a panel data approach," Economic Change and Restructuring, Springer, vol. 50(4), pages 341-365, November.
    10. Narula, Rajneesh & Marin, Anabel, 2003. "FDI spillovers, absorptive capacities and human capital development: evidence from Argentina," Research Memorandum 018, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    11. repec:ilo:ilowps:378212 is not listed on IDEAS
    12. repec:spo:wpmain:info:hdl:2441/10184 is not listed on IDEAS
    13. repec:hal:spmain:info:hdl:2441/10184 is not listed on IDEAS
    14. Bashir Ahmad Joo & Sana Shawl, 2023. "Understanding the Relationship Between Foreign Direct Investment and Economic Growth in BRICS: Panel ARDL Approach," Vikalpa: The Journal for Decision Makers, , vol. 48(2), pages 100-113, June.
    15. Paolo Epifani & Gino Gancia, 2008. "The Skill Bias of World Trade," Economic Journal, Royal Economic Society, vol. 118(530), pages 927-960, July.
    16. Hakkala, Katariina & Heyman, Fredrik & Sjöholm, Fredrik, 2007. "Cross-Border Acquisitions, Multinationals and Wage Elasticities," Working Paper Series 709, Research Institute of Industrial Economics.
    17. M. Magnani, 2009. "Labor share dynamics: a survey of the theory," Economics Department Working Papers 2009-EP07, Department of Economics, Parma University (Italy).
    18. Muhammad Shafiullah & Ravinthirakumaran Navaratnam, 2016. "Do Bangladesh and Sri Lanka Enjoy Export-Led Growth? A Comparison of Two Small South Asian Economies," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 17(1), pages 114-132, March.
    19. Markus Brueckner & Ngo Van Long & Joaquin L. Vespignani, 2020. "Non-Gravity Trade," Globalization Institute Working Papers 388, Federal Reserve Bank of Dallas.
    20. Olarreaga, Marcelo, 1999. "Foreign-owned Capital and Endogenous Tariffs," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 14, pages 606-624.
    21. Daron Acemoglu & Gino Gancia & Fabrizio Zilibotti, 2015. "Offshoring and Directed Technical Change," American Economic Journal: Macroeconomics, American Economic Association, vol. 7(3), pages 84-122, July.
    22. Bhavesh Garg & Pravakar Sahoo, 2021. "DO DIFFERENT TYPES OF CAPITAL INFLOWS HAVE DIFFERENTIAL IMPACT ON OUTPUT? Evidence from Time series and Panel Analysis," IEG Working Papers 443, Institute of Economic Growth.
    23. Ayodele, Olumide S. & Obafemi, Frances N., 2006. "Fiscal and Quasi-Fiscal Effects of the Parallel Exchange Premium in Nigeria," Conference papers 331503, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    24. Dieter Schumacher, 2019. "The integration of international financial markets: an attempt to quantify contagion in an input–output-type analysis," Economic Systems Research, Taylor & Francis Journals, vol. 31(3), pages 345-360, July.
    25. Robert C. Feenstra, 1998. "Integration of Trade and Disintegration of Production in the Global Economy," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 31-50, Fall.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:worlde:v:29:y:2006:i:1:p:79-94. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0378-5920 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.