TARIFFS, CAPITAL MOBILITY, AND FOREIGN OWNERSHIP

This paper is concerned with the welfare effects of a small capital movement from one country to another followed by the repatriation of that capital's marginal product. Although this issue has been addressed previously, especially from the point of view of the host country, there seems to exist no formal analysis which treats simultaneously the interdependent welfare effects on the investing and host countries and thus on world real income. The purpose of this paper is to develop such an analysis in order to determine the conditions under which a capital flow will help or harm a country. © 1979.