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Title: |
Europe 1992 and the Liberalization of Direct Investment Flows: Services
versus Manufacturing |
| Author: |
Rivera-Batiz,
Francisco L.; Rivera-Batiz, Luis A. |
| Author
Affiliation: |
Columbia U; U
CA, San Diego |
| Source: |
International Economic Journal, Spring 1992, v. 6, no. 1, pp. 45-57 |
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Publication Date: |
Spring 1992 |
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Abstract: |
The European integration of 1992 offers to
open-up the service sector of EC countries to substantial investment
flows from other member nations. This paper studies how the elimination
of restrictions on the flow of foreign capital into services affects the
economic welfare of a recipient economy. A model of increasing returns
due to specialization is developed in which capital is sector-specific;
this model is used to examine the differential impact of foreign capital
inflows into the service and manufacturing sectors. It is shown that
direct foreign investment in the service sector has positive effects on
national welfare that investment in manufacturing may lack. |
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