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Full-Text Articles in Labor Economics
A Model Of Industrialization And International Wage Convergence Based On Multi-Plant Foreign Direct Investment, Hian Teck Hoon, Irene Ng
A Model Of Industrialization And International Wage Convergence Based On Multi-Plant Foreign Direct Investment, Hian Teck Hoon, Irene Ng
Research Collection School Of Economics
We show that for industrialization and international wage convergence through multi-plant foreign direct investment (FDI) to occur, the measure of the quality of the social infrastructure in the South relative to that in the North must be at least as large as the South-North wage ratio. We also show that if profitable FDI flows already take place from the North to the most productive economy in the South, then less productive Southern economies can also become recipients of FDI, provided that they are integrated into the world trading system, and there are no impediments to the decline of their wage …
Endogenous Growth And Equilibrium Unemployment In A North-South Model Of The World Economy, Hian Teck Hoon
Endogenous Growth And Equilibrium Unemployment In A North-South Model Of The World Economy, Hian Teck Hoon
Research Collection School Of Economics
A North-South model is developed which incorporates an endogenous rate of equilibrium unemployment in the North in the context of long-run growth. It is shown how increases in the size of public debt and unemployment compensation financed by payroll taxation, all measured relative to productivity, raise the Northern natural rate of unemployment and, consequently, reduce the global rate of long-run growth. The effect of the shocks is also to drive down the rate of employment expansion in the South. A set of the fundamental determinants of the world terms of trade is obtained, which includes policy parameters.