Economic Reform, Skill Formation and Foreign Capital

16 Pages Posted: 12 Apr 2006

See all articles by Saibal Kar

Saibal Kar

Centre for Studies in Social Sciences, Calcutta; Institute of Labor Economics (IZA)

Basudeb Guha-Khasnobis

United Nations - World Institute for Development Economics Research (UNU/WIDER)

Abstract

Does trade liberalisation promote skill formation and positively influence the inflow of foreign capital in an economy? How do incentives offered to foreign capital affect skill formation and skilled-unskilled wage inequality? Is liberalisation of agricultural exports counterproductive to skill formation and foreign capital inflow in the economy? We try to capture these relationships between foreign capital and skill formation in a small open economy facing various exogenous shocks. Among other results, we show that import liberalisation increases skill formation and the inflow of foreign capital in the country. We explore the evolving state of the skilled-unskilled wage gap in a regime of greater skill formation.

Suggested Citation

Kar, Saibal and Guha-Khasnobis, Basudeb, Economic Reform, Skill Formation and Foreign Capital. The World Economy, Vol. 29, No. 1, pp. 79-94, January 2006. Available at SSRN: https://ssrn.com/abstract=875106 or http://dx.doi.org/10.1111/j.1467-9701.2006.00759.x

Saibal Kar (Contact Author)

Centre for Studies in Social Sciences, Calcutta ( email )

R-1, Baishnabghata Patuli Township
Calcutta, 700 094
India
91-33-2462 7252 (Phone)
91-33-2462 6183 (Fax)

HOME PAGE: http://www.cssscal.org

Institute of Labor Economics (IZA) ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Basudeb Guha-Khasnobis

United Nations - World Institute for Development Economics Research (UNU/WIDER) ( email )

Katajanokanlaituri 6B
Helsinki, FIN-00160
Finland

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