RAW MATERIALS, PROCESSING INCENTIVES AND FOREIGN OWNERSHIP

The effect of foreign ownership on trade policy outcomes has long been a topic of interest, but only recently have the consequences of multiple levels of production been considered. We examine processing incentives in a simplified general equilibrium framework with foreign ownership of a primary factor. Second-best considerations mean non-intervention is sub-optimal, but multiple levels of production can lead to an investment terms-of-trade effect of indeterminate sign, depending critically on the production structure. We illustrate how this may change standard conclusions regarding the effect of trade restrictions where there is foreign ownership, and optimal intervention to achieve specific policy objectives.


Issue Date:
2000
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/21866
Total Pages:
12
Series Statement:
Selected Paper




 Record created 2017-04-01, last modified 2017-08-24

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