Rural poor economies and foreign investors: an opportunity or a risk?

ABSTRACT: In the current age of commercial and financial openness, remote and poor local economies are becoming increasingly exposed to inflows of external capital. The new investors - enjoying lower credit constraints than local dwellers - might play a propulsive role in local development. At the same time, inflows of external capital can have negative impacts on local natural resource-dependent activities. We analyze a two-sector model where both sectors damage the environment, but only that of domestic producers relies on natural resources. We assess under which conditions the coexistence of the two sectors is compatible with sustainability, defined as convergence to a stationary state characterized by a positive stock of the natural resource. Moreover, we find that capital inflows can be stimula

SUBMITTER: Antoci A 

PROVIDER: S-EPMC4266523 | biostudies-literature | 2014

REPOSITORIES: biostudies-literature