On the welfare effects of trade and investment liberalization

摘要

Using a three-factor knowledge- and physical capital model of trade and multinational activity, weconsider a set of policy experiments to assess the welfare effects of trade and investment liberalizationin general equilibrium. Specifically, we address the question of whether and under whichcircumstances a single versus a combined trade/investment liberalization strategy or a unilateralversus a bilateral policy change is preferable from a single country's and the world's point of view.The focus of this paper is to look at three relevant questions. First, when is investment liberalizationbeneficial and when is it harmful for a single economy or the whole world? Second, is pure investmentliberalization a welfare maximizing strategy? Third, when is either kind of liberalization (trade,investment, or both) welfare improving and when neither of them?