We establish four-sector general equilibrium models to investigate how an inflow of foreign capital influences the skilled–unskilled wage inequality in the presence of the endogenous public infrastructure provision. In the situation of the pure public infrastructure provision, the change of...

This paper proposes a new mechanism linking trade and wage inequality in developing countries --- the quality-upgrading mechanism --- and investigates its empirical implications in panel data on Mexican manufacturing plants. In a model with heterogeneous plants and quality-differentiated goods,...

This 2007 Article IV Consultation highlights that real GDP in South Africa grew by 5 percent in 2006 and continued to grow vigorously in early 2007. Growth was driven by strong domestic demand, with private consumption and investment spending supported by continuing robust consumer and business...

This paper presents a simple framework that illustrates the link between skill-based wage differentiation and human capital acquisition given skill-biased technical progress. The analysis points to the economic costs resulting from labor market and income redistribution policies that prevent the...

This paper discusses the problem of unemployment in developed countries that faces international labor movement. There are two types of unemployment. The first traditional type of unemployment exists simply because the common wage rate is fixed and higher than the equilibrium level. The second...

This paper elaborates on a number of key principles that need to underpin a coherent and development-friendly architecture for the WTO. The key principles include enlarging the scope of WTO bargaining to include labor flows as well as capital flows; creating a structure that would provide a...

The government of Rwanda has recognized that economic development in most areas would have to be the responsibility of the private sector (particularly since military and civil service employment would be reduced), but that the public sector could still have a role in promoting economic equality...

This paper reviews economic developments in the Republic of Mozambique during 1990–96. Under the Economic and Social Rehabilitation Program (ESRP), the economy has made impressive economic gains. Real GDP growth averaged 6.7 percent in 1987–95, despite the civil war, a decline in...

The review outlines a simple analytical model to explain the unemployment puzzle, especially the U-curve phenomenon. It analyzes the central institutional imperfections that characterize the existing Mauritian labor market and suggests possible reforms. It also reviews the IMF’s...

The Mauritian economy showed strong performance owing to its sound macroeconomic policies. Executive Directors emphasized the need to remain competitive and address the growing unemployment problem. They commended the efforts to support the developments in financial services, free port...