A model of North-South trade is developed in which TNCs invest in the South to produce a good competing directly with the Northern good. It implies that the liberalization of direct foreign investment to the South increases the long-run equilibrium rate of both Northern and Southern growth. However, since the long-run equilibriums is likely to be a saddlepoint, the North can be hurt by this globalization.
Get full access to this article
View all access options for this article.
References
1.
Blecker, Robert
. 1995. The New Economic Integration: Structuralist Models of North-South Trade and Investment Liberalization, Unpublished. Department of Economics, The American University, Washington, D. C.
2.
Burgstaller, Andre
and Neantro Saavedra-Rivano. 1984. Capital Mobility and Growth in a North-South Model. Journal of Development Economics15: 213-237.
3.
Dutt, Amitava
. 1990. Growth, Distribution and Uneven Development. Cambridge, UK: Cambridge University Press.
4.
Dutt, Amitava
. 1996. Transnational Corporations, Economic Openness, and Global Development. Unpublished. Department of Economics, University of Notre Dame.
5.
Economist, The
. 1994. A Survey of the Global Economy, The Economist, October 1, 1-38.
6.
Kalecki, Michal
. 1971. Selected Essays on the Dynamics ofthe Capitalist Economy. Cambridge, UK: Cambridge University Press.
7.
Krugman, Paul
. 1994. Does Third World Growth Hurt First World Prosperity?Harvard Business Review, July-August, 13-121.
8.
Schwab, Klaus
and C. Smadja. 1994. The New Rules of the Game in a World of Many Players. Harvard Business Review, November.
9.
Taylor, Lance
. 1983. Structuralist Macroeconomics. New York: Basic Books.
10.
United Nations Conference on Trade and Development
. 1994. World Investment Report, 1994. United Nations, New York and Geneva.
11.
Wood, Adrian
. 1994. North-South Trade, Employment and Inequality. Oxford: Oxford University Press.
