Do Measures of Economic Reforms Complement Each Other?

Abstract

Globalization is a package of interrelated measures including tariff liberalization and encouragement to FDI. The question to be posed is whether these measures produce similar effects reinforcing each other or they have contradictory effects. We use a three-sector general equilibrium model to show that foreign capital inflow produces unfavorable effects on unemployment and welfare while tariff liberalization produces positive effects on these variables.