Discussion Paper Details

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Title: Trade, FDI and Congestion - the Small and very Open Economy

Author(s): Kristof Dascher

Publication Date: August 2000

Keyword(s): Foreign Direct Investment, Open City and Small Open Economy

Programme Area(s): International Trade and Regional Economics

Abstract: Typically, a small and open economy trades goods at given world prices. Here, we present a model of a very open small economy, where capital and labour are internationally mobile, too. When investing into infrastructure, the economy?s government attracts not only mobile capital but mobile labour, too. These capital and labour inflows into the economy reinforce each other. They contribute to rising welfare for land owning indigenous households. But all potential benefits for land renting immigrant households are capitalized into higher land rents. The paper is also an attempt to give an account of the recent economic boom in Ireland.

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Bibliographic Reference

Dascher, K. 2000. 'Trade, FDI and Congestion - the Small and very Open Economy'. London, Centre for Economic Policy Research.