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Increased Input Supplies, Government Size, Welfare and Trade in the Presence of Increasing Returns

Author

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  • Sajid Anwar

    (School of Economics & Marketing, University of Canberra, ACT, Australia and International Graduate School of Management, University of South Australia, Adelaide, Australia (e-mail: sajid.anwar@unisa.edu.au))

Abstract

This paper examines the impact of exogenous changes in the supply of primary factors of production on the relative size of government and welfare in the context of a model where increasing returns are present in the production of an intermediate good. It is shown that an increase in the supply of labor (capital) increases the relative size of government if the share of labor is large (small) in the public sector as compared to the private sector. An increase in the supply of capital increases welfare but the impact of an increase in the supply of labor cannot be unambiguously determined. In the context of a North-South model, the paper also considers the pattern of trade. It is shown that North will export capital-intensive intermediate goods to the South.

Suggested Citation

  • Sajid Anwar, 2003. "Increased Input Supplies, Government Size, Welfare and Trade in the Presence of Increasing Returns," Journal of Economics, Springer, vol. 78(3), pages 259-272, March.
  • Handle: RePEc:kap:jeczfn:v:78:y:2003:i:3:d:10.1007_s00712-002-0568-3
    DOI: 10.1007/s00712-002-0568-3
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    Citations

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    Cited by:

    1. 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.
    2. Anwar, Sajid, 2005. "Specialisation-based external economies, supply of primary factors and government size," Journal of Economics and Business, Elsevier, vol. 57(3), pages 259-271.
    3. Sajid Anwar & Mingli Zheng, 2004. "International Factor Mobility, Government Size and Welfare," Australian Economic Papers, Wiley Blackwell, vol. 43(2), pages 248-255, June.

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