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The Long-Run Effects Of Structural Change And The Treatment Of International Capital Accumulation, Mobility And Ownership

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Executive Summary

Taking a commonly-used and commonly-available trade policy model as the starting point, the authors examine the long-run effects of large-scale structural change with and without international capital accumulation, mobility and ownership. They demonstrate the relative merits and limitations of different treatments of international capital accumulation, mobility and ownership. In doing so, they present a treatment of international capital accumulation, mobility and ownership that gives policy analysts an approach to analysing the effects of large-scale structural policies that is not too heavy in its theoretical and data demands. The findings support the work of Baldwin (1992) and others who have demonstrated that ignoring capital accumulation, mobility and ownership underestimates net output and welfare effects of large-scale structural change.

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