Capital Inflow, Capacity Expansion And Wage Gap A...

Capital Inflow, Capacity Expansion and Wage Gap: A Theoretical Evaluation By- Tejas Chopra Tiyasa Paul tejas_chopra2001@yahoo.com tiyasapaul96@gmail.com 9811549115 8697142856 St. Xavier’s College,Kolkata AsutoshCollge, Kolkata Economics Department 2nd Year Economics Department 2nd Year SaptakaHansda SamratDasgupta saptakahansda@gmail.com samrat.dsgpt@gmail.com 7278894559 8961851610 St. Xavier’s College,Kolkata St. Xavier’s College,Kolkata Economics Department 2nd Year Economics Department 2nd Year Abstract The paper examines how capital flow contributes to capacity expansion, employment generation and welfare. In so doing we use both partial equilibrium and general equilibrium framework. In particular, we choose an industrial organization approach to study the effect of rise in capital inflow in perfect competition and monopoly. While using the general equilibrium framework we consider a small open economy consisting of 3 sectors.viz.- Service, manufacturing and agricultural sector. The service sector is export oriented sector while the manufacturing sector is import competing. The agricultural sector is non-traded. We will examine how capital flow influences sectoral composition of output, returns to factors and unemployment of skilled labour. Introduction Foreign capital has significant role for every nationalShow MoreRelatedFiscal Policy Role and Development in Bulgaria and Eu7949 Words   |  32 Pagesof: †¢ the equilibrium level of aggregate manufacture; †¢ the level of employment / unemployment /; †¢ the level of prices / inflation /. By thus the fiscal policy is mainly connected with so called economy of demand or Keynesian theoretical conception, according to which aggregate demand has a decisive importance at formation of the key macroeconomic relationships / aggregate demand creates its necessary aggregate supply /. 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