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Title: |
Protection, Terms of Technology Transfer and
Foreign Investment: A Welfare Analysis |
| Author: |
Anam, Mahmudul;
Supapol, Atipol Bhanich |
| Author
Affiliation: |
York U |
| Source: |
International Economic Journal, Winter 1992, v. 6, no. 4, pp. 75-83 |
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Publication Date: |
Winter 1992 |
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Abstract: |
This paper demonstrates that the welfare
of the technology-recipient country can be lower when superior foreign
technology is transferred at a more favourable term to a protected
sector. It is shown that a decrease in the price of the imported
technology increases the output of the protected good. The source of the
welfare paradox is therefore this aggravation of production distortion
created by the cheaper foreign technology. Furthermore, when the
protected good is capital intensive, capital rents are shown to be
negatively correlated with the price of foreign technology. Thus, the
presence of foreign capital makes the welfare paradox more likely. |
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