The Impact of Financial Constraints and Wealth Inequality on International Trade Flows, Capital Movements and Entrepreneurial Migration

Arbeitspapier

We introduce financial frictions into a simple two sector model of international trade with heterogeneous agents and investigate the impact of differences in the strength of financial institutions and wealth inequality on trade flows, capital movements and entrepreneurial migration. Distinct cost-cutting and career-changing motives for entrepreneurial migration exist, which can lead to two-way entrepreneurial flows. We establish presumptions that countries with stronger financial systems or greater wealth inequality will export the output of the financially dependent sector, will import capital and will be a (net) exporter of entrepreneurs. Important exceptions are shown.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 4775

Classification and Topics

• Classification: Wirtschaft ; International Investment; Long-term Capital Movements ; International Financial Markets
• Subject: entrepreneurial migration ; trade flows ; capital flows ; wealth inequality ; financial frictions

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bougheas, Spiros ; Falvey, Rod
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/96826
• Last update: 10.03.2025, 11:41 AM CET