Infrastructure aid, deindustrialization, and welfare
By: prepared by E. Kwan Choi.
Contributors: International Monetary Fund. Fiscal Affairs Dept.
Series: IMF working paper -- WP/05/150
Publisher: International Monetary Fund, Fiscal Affairs Dept.
Published: 2005
Place of publication: Washington, D.C
Language: eng
Number of pages: 24
Subjects: Deindustrialization -- Developing countries.; Infrastructure (Economics) -- Developing countries.; Economic assistance -- Developing countries.
Description: This paper investigates the deindustrialization and welfare effects of infrastructure aid in developing countries. In the short run, cost-saving infrastructure aid in the export sector increases the domestic wage rate, whereas the same aid in the import sector lowers it. The cost of nontraded goods rises whether the export or the import sector receives infrastructure aid. Infrastructure aid in the nontraded sector has no effect on domestic factor prices. Laborsaving infrastructure aid causes an expansion of the export sector, while capital-saving infrastructure aid results in a Dutch disease effect in the export sector. If aid is below the optimal level, infrastructure aid increases consumer income and welfare.
Notes: "July 2005."

Includes bibliographical references (p. 23-24).

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