We study the incentives to expropriate foreign capital under democracy and oligarchy. We model a two-sector small open economy where foreign investment triggers Stolper-Samuelson effects through reducing exporting costs. We show how incentives to expropriate depend on the distributional effects of the investment and on how these affect the interests of the group in power. How investment affects...

Feldstein and Horioka (Econ J 90:314–329, 1980) observed that saving and investment move closely together in the major OECD countries. This finding is a puzzle if national economies are characterized by one sector neoclassical production functions—with diminishing returns to capital, a high level of savings in a country should create an incentive to export capital. In this paper, we show that t...

Several economic theories can explain growth, but what is popular to the relevance of relationship between Foreign Direct Investment, Manufacturing and Unemployment neoclassical theory where capital flows "downhill" from rich countries (capital abundance) poor scarce). So that all access same technology produce similar goods, while difference in per capita income reflects rate return on capital...

Factor price equality across countries is an important implication of the Heckscher-Ohlin-Samuelson model of international trade. Although an influential theoretical result, the model has received surprisingly little empirical support. Burgman and Geppert (1993) argue that this might be due to the neglect of the nonstationarity property of the time series under consideration. Using a cointegrat...

This paper revisits the role of skill distributions in trade using a variant of the Heckscher-Ohlin model with multidimensional skill endowment and specialized production organized in teams. The equilibrium is characterized by the “effective endowment”, the part of endowment that is actually utilized in production, which depends on the team matches and the task specialization within teams. It i...

This paper empirically investigates the effect of product cycle on comparative advantage for countries with different knowledge capital endowment. Product cycle is the exogenous nature of technology evolution in each industry. Longer product cycle means new discovery takes longer time to arise. Meanwhile the imitation of existing innovation is easier in industries with longer product cycles. St...

Previous research has uncovered precious little support for Heckscher-Ohlin trade theory. This paper demonstrates that those efforts focus on an overly restrictive version of the model. Indeed, strong evidence that output is a function of endowments can be found if we recognize that countries with sufficiently disparate endowments specialize in different subsets of goods. This paper develops a ...

This paper investigates the consequences of designing domestic incentive regulation under asymmetric information in the general equilibrium context of an open economy. We discuss the implications of such incentive regulation for international specialization and the conditions for trade openness to be still welfare-improving. More specifically, we append to an otherwise standard 2× 2 Heckscher-O...