Foreign Capital Inflow, Technology Transfer and National Income

9 Pages Posted: 21 Jan 2002


According to Jones and Marjit (1992), in a two-sector, full-employment model it is not possible to show that growth in the foreign capital employed in the export sector of a small open economy will lead to a fall in the welfare in the presence of a protected import-competing sector. In this short paper, we have shown that one may get the immiserizing result even in this framework if the inflow of foreign capital into the export sector is accompanied by a technology transfer, which leads to a fall in the labour-output ratio in this sector.

Keywords: Foreign capital; Technology transfer; Export sector; National income

JEL Classification: F2, F20, F21

Suggested Citation

Chaudhuri, Sarbajit, Foreign Capital Inflow, Technology Transfer and National Income. Available at SSRN: or

Sarbajit Chaudhuri (Contact Author)

University of Calcutta ( email )

56A, B.T. Road
Kolkata, West Bengal 700 050
+91 33 2557 5082 (Phone)
+91 33 2844 1490 (Fax)


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