Browsing by Author "Kapoor, Shivam"

Now showing 1 - 1 of 1

Essays on Liberalization and Trade Policy in Developing Economies under Increasing Returns
(Indian Statistical Institute, 2026-06-25) Kapoor, Shivam
Developing countries occupy an important place in the world trade pattern of today. Taking advantage of low wages in these countries, the low technology and labor intensive stages of production in many product lines are outsourced here. Hence participation in Global Value Chains for a developing country on the one hand generates employment in manufacturing thereby helping realize economies of scale arising out of division of labor, on the other hand the gains from trade accruing from such participation may be low due to presence of severe distortions like weak legal and financial institutions, and may cause distributional conflicts. My dissertation studies the role of trade and investment liberalization policies for developing countries in the presence of increasing returns. Chapter 2 of the thesis focuses on trade in both final good and the differentiated varieties of an intermediate input between a capital abundant country and a labor abundant country. The intermediate input sector comprises monopolistically competitive firms of heterogeneous productivity. I analyze the impact on the two countries of moving from autarky to free trade. When trade in varieties is subject to both fixed and variable trade costs, the impact of a bilateral liberalization is studied with the help of a numerical simulation. Chapter 3 considers a small open economy characterized by open urban unemployment and rural-urban migration. The urban sector produces an import-competing (tariff protected) final good and a non-traded input that is subject to increasing returns to scale. The rural sector produces the exportable by combining the input with rural labor. In this structure the policy impacts of a foreign capital inflow and an increase in tariff protection are studied. In Chapter 4, I consider a two country, three sector and one factor model of trade and unemployment. Trade takes place in one homogeneous good (costlessly) and the varieties of two differentiated industrial goods (subject to variable trade cost). Equilibrium unemployment of the Shapiro-Stiglitz type is modeled. In this structure I analyze the impact of a unilateral, sector-specific trade policy on industrial relocation in both the protected and unprotected sectors, and on the employment rates in the two countries. Turning again to the case of a small open economy, in Chapter 5, I combine the production structure studied in Chapter 2 with the assumption that the Home economy imports a fixed number of Foreign varieties at a given price (subject to a tariff). Here I study the productivity and welfare effects of an inflow of foreign capital assuming full repatriation of foreign profits. Summary, conclusions and possible extensions for future research are outlined in Chapter 6.