Immiserisation and the emergence of multinational firms in a less developed country: a general equilibrium analysis.

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Abstract

Investigates the resource allocational implications of the expansion of the multinational firm sector within a less developed country. Because many of the questions raised with respect to this type of investment can only be dealt with by considering the effect on aggregate employment and national income, a general equilibrium model is developed that captures the unique features of that type of investment within a less developed economy. In particular, an X-efficiency factor enters the multinational firm production function to capture managerial, technological or other advantages possessed by the multinationals. The principal results are that the expansion of the multinational firm sector can lead to immiserisation and that a non-wage income tax can be used both to mitigate the effects of the multinationals and to compensate for existing factor market distortions present within a less developed country.-Author

Original languageEnglish (US)
Pages (from-to)22-33
Number of pages12
JournalJournal of Development Studies
Volume20
Issue number1
StatePublished - 1983

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general equilibrium analysis
firm
national income
income tax
production function
equilibrium model
income
efficiency
economy
present
market
resource
resources
less developed country
multinational firm
effect

ASJC Scopus subject areas

  • Development

Cite this

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