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Financial Advantage, Outsourcing and FDI under Wage Uncertainty

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  • Choi, Jai Young
  • Choi, E Kwan
Abstract
This paper investigates the role of infrastructure aid to developing countries in a 3x2 model with two traded goods and a nontraded good, with the focus of analysis placed on the effects on real national income and the Dutch disease effect. It is shown that for a recipient country, infrastructure aid to the traded good sectors is necessarily welfare-enhancing but infrastructure aid to the nontraded sector is welfare-neutral. Output effects of infrastructure aid depend on factor substitution, relative factor-saving effect, and the output response of the nontraded good. The effects on factor and nontraded good prices are also analyzed.

Suggested Citation

  • Choi, Jai Young & Choi, E Kwan, 2013. "Financial Advantage, Outsourcing and FDI under Wage Uncertainty," Staff General Research Papers Archive 37376, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genres:37376
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    References listed on IDEAS

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    1. Wilhelm Kohler, 2004. "International outsourcing and factor prices with multistage production," Economic Journal, Royal Economic Society, vol. 114(494), pages 166-185, March.
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    12. Choi, E. Kwan, 2007. "To outsource or not to outsource in an integrated world," International Review of Economics & Finance, Elsevier, vol. 16(4), pages 521-527.
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    Cited by:

    1. Hamid Beladi & Reza Oladi, 2014. "On Offshoring and Trade Deficit," Review of Development Economics, Wiley Blackwell, vol. 18(3), pages 517-523, August.
    2. Mandal, Biswajit & Prasad, Alaka Shree & Bhattacharjee, Prasun, 2017. "A Review of Literature on Time Zone Difference and Trade," MPRA Paper 78779, University Library of Munich, Germany.
    3. Zhou, Yiming & Zeng, Dao-Zhi, 2015. "Offshoring, globalization, and welfare," The North American Journal of Economics and Finance, Elsevier, vol. 31(C), pages 75-93.

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    More about this item

    Keywords

    outsourcing; foreign direct investment;

    JEL classification:

    • F1 - International Economics - - Trade

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