Foreign Direct Investment in a Small Open Economy and Global Trade Liberalization in Agriculture

Foreign Direct Investment in a Small Open Economy and Global Trade Liberalization in Agriculture: A Note

In ap production structure reasonsble for a developing economy this note shows that there may arise a conglict between the worldwide liberalized trade policies in agriculture, which raise the price of the economy s primary qxportable commodity, adn the inflow of foreign capital into the economy. However, if the evonomy strictly, e.g. the removal of the indirect farm subsidies, the paper argues that the pissible conflict may be avoided, The paper provides a theoretical basis for the removal of the farm suvsidies if the economy wants to develop its technologically more advanced sectors with an adequate supply of foreign capital.