FOREIGN-CAPITAL AND TECHNOLOGY-TRANSFER IN A DYNAMIC-MODEL

We consider a dynamic three-sector dual-economy model when the technol ogy transfer takes place from the foreign enclave to the labor-intensi ve domestic enclave. The long-run equilibrium and the comparative stea dy-state effects are analyzed. It is shown that the policy of subsidiz ation to the foreign enclave may satisfy the conflicting tasks of rais ing national income and lowering unemployment simultaneously in the lo ng run. Subsidization to a domestic enclave does not satisfy both the objectives.