MIDDLE EAST TECHNICAL UNIVERSITY

Department of Economics Seminar Series 

"Labor-Eliminating Technological Progress and Foreign Direct Investment"

by

Onur A. Koska

(University of Canterbury)

Date: December 23,  2022 (Friday)

Time: 14:00

F106

FEAS - A Building

Abstract

Capital scarce developing countries heavily depend on the inflow of foreign direct investment to sustain economic growth. However, if a developing economy experiences labor-eliminating technical progress, such inflow of capital may replace labor in manufacturing. This may compel policy makers to advocate for a foreign investment tax to restrict the inflow of capital into manufacturing as the sector faces a labor-eliminating technical change. Contrary to this view, we show that in such an environment wages will rise and any policy that restricts inflow of foreign capital does not benefit workers.