Importing High-Risk Capital and Revealing Hidden Comparative Advantages

22 Pages Posted: 15 Nov 2004

See all articles by Tamir Agmon

Tamir Agmon

Tel Aviv University, Faculty of Management

Date Written: October 2004

Abstract

The comparative advantage of a country is determined by its factor intensity. In many cases factors of production can be accumulated over time and thus effect a change in the comparative advantage of a given country. The changes in the accumulation of factors can be a policy decision, or it can arise from other economic developments. The change in the comparative advantage of Israel in the last decade of the 20th century where the country has become a center for innovative new technology was affected by the globalization of the US capital market and the ability of Israeli companies and service organization to build an informational infrastructure that has made it possible to import high-risk specific sector capital to Israel. Importing this type of capital has completed the already existing human capital and makes a potential, hidden, advantage into a business reality. The Israeli experience is evidence to the contribution of international capital movements to economic growth of a small country. It also shows the relations between the international finance model of capital movements and the development economics case for the changing pattern of the comparative advantages of small countries, and the contribution of the capital markets to the process.

Keywords: International capital movements, globalization of capital markets, comparative advantage in small countries

JEL Classification: F21

Suggested Citation

Agmon, Tamir, Importing High-Risk Capital and Revealing Hidden Comparative Advantages (October 2004). Available at SSRN: https://ssrn.com/abstract=618721 or http://dx.doi.org/10.2139/ssrn.618721

Tamir Agmon (Contact Author)

Tel Aviv University, Faculty of Management

Ramat Aviv
Tel Aviv
Israel
+972504896333 (Phone)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
127
Abstract Views
934
rank
275,442
PlumX Metrics