The long run survival of small nations: A dynamic view

In this paper, we analyze the dynamics of a very small economy which tries to attract foreign investments. For that purpose, we model the intertemporal behavior of a small jurisdiction using taxes and attractive public infrastructures as policy instruments, for given policy choices of the rest of the world. Applying Pontryagin's maximum principle, we then characterize the potential steady states which are attainable. These results give some insights into the policy behavior that may guarantee the long run survival of very small economies.

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Year of publication:	2010
Authors:	Pieretti, Patrice ; Zanaj, Skerdilajda ; Zou, Benteng
Publisher:	Bielefeld : Bielefeld University, Institute of Mathematical Economics (IMW)
Subject:	Kleines-offenes-Land \| Standortpolitik \| Zeitpräferenz \| Dynamisches Gleichgewicht \| Standortwettbewerb \| Theorie \| public goods competition \| spatial competition \| foreign direct investments \| country size

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Series:	Working Papers ; 437
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	640697704 [GVK] hdl:10419/43775 [Handle]
Classification:	H25 - Business Taxes and Subsidies ; H73 - Interjurisdictional Differentials and Their Effects ; F13 - Commercial Policy; Protection; Promotion; Trade Negotiations ; F15 - Economic Integration ; F22 - International Migration
Source:	EconStor

Persistent link: https://www.econbiz.de/10010272562