Trade Versus Investment Liberalisation
Data
01.01.1997
01.01.1997
Autori
James R. Markusen
Codice JEL
F10,F12,F23
F10,F12,F23
Publisher
Economy and Society
Economy and Society
Editor
Gianmarco I.P. Ottaviano
Gianmarco I.P. Ottaviano
Despite several theoretical contributions and considerable informal empirical evidence to the contrary, a notion that trade and investment are substitutes persists in trade policy analysis. This paper considers the liberalisation of commodity trade versus liberalisation allowing direct investment versus the two together. For a relatively skilled-labour-scarce economy, I show that trade and investment liberalisation are quite different, and that the two together are in a sense complements. The intuition may be that direct investment provides such a country with crucial inputs (knowledge-intensive producer services) without which the country cannot effectively exploit its abundant factors in certain industries.