A General Equilibrium Model of Multinational Corporations in Developing Economies *

The impact of multinational corporations on a developing country: a trade off in the long run?

“…Four because capital is specific to two regions. A similar result has been obtained by Batra (1986) in an economy with full employment and perfect mobility of capital. The author is grateful to an anonymous referee for suggesting this course.…”

“…Building upon Mendez's paper we show that in the long run a trade off exists between reducing unemploynlent and increasing national income and that, in fact, is the choice that LDC governments have to make. Our paper also differs significantly from Batra (1986) in that we specifically account for urban unemployment. In addition, in keeping with the 'long-run' flavour of the model, we introduce an urban wage rate, which is not fixed as in Mendez (1983) but is instead endogenously determined by the unemployment rate and the rural wage rate.…”

Equity Control of Multinational Firms by Less Developed Countries: A General Equilibrium Analysis

“…Thus 3The literature on the multinational firm within a general equilibrium setting has grown dramatically since the early 1980s. Two recent papers whose analysis is tailored to developing countries are Batra (1986) and Shieh (1988). "Empirical support for the assumption can be found in La11 (1976).…”

Welfare, taxes and foreign investment

“…3 Batra and Ramachandran (1980) and Batra (1986) consider that foreign investors have a better technology, but this is done in a static environment. The first paper studies the optimal tax and the second studies the welfare effect of foreign investment.…”