Gouranga Gopal Das

This paper contributes to the literature on finance, production, and Research and Development (R&D) by investigating the unique possibilities of polarized decisions of entrepreneurs to yield “extreme” points rather than an “interior solution.” Financiers provide credits for employing sector‐specific skilled and unskilled workers as well as for R&D. With the objective of maximizing returns, financiers' interest lies in financing R&D only in the skilled sector while the unskilled sector—without innovation—collapses. Such corner solution occurs due to much higher skilled‐augmenting technical change guaranteeing maximum prospective return than that in the unskilled. This offers a novel interpretation of a declining share of production workers.

COVID-19 has adverse impacts on contact-intensive sectors, viz., manufacturing, tourism, and the entertainment sector (ES). In a general equilibrium (GE) model with online, entertainment and informal sectors employing skill, unskilled, and capital, we show that COVID-19 could cause polarization pushing contact-intensive entertainment industry on the brink of collapse while the other two survive. Dual roles of factor intensity and contact intensity (CI) contribute to such finite changes, triggering inter-skill wage inequality. This is the first of its kind to offer a theoretical mechanism capturing the contractionary effects on contact-intensive sectors and wage inequality. These results match with the literature emphasizing the hardships faced by the cultural sector.

Considerable diffusion of technology occurs via global trade and foreign direct investment (FDI) while firm heterogeneities cause considerable production heterogeneities. Hi-tech products and investment goods of differentiated varieties from e...

The paper explores the emergence and consequence of contract farming as a new subsector of agriculture in a small open developing economy, applying the theory of finite change in a general equilibrium framework. In this paper, we analyze the entry of a cash crop-producing foreign contract farming (CF) subsector within the agricultural sector of a country. Entry requires a cash crop price that is substantially above the price of the food crop already being produced within the country. CF (a) increases GDP and hence aggregate economic welfare; (b) may make income distribution more skewed; (c) reduces domestic production of food and hence, (d) increases food import and hence food insecurity. Thus, CF might imply a trade-off between inequality and growth. We employ a variant of the 3 × 3 mixed specific factor-Heckscher Ohlin general equilibrium model of production and trade where introduction of a new policy may lead to the emergence of a new sector resulting in finite changes where we show the possibilities of sectoral diversification with combinations of contract farming vis-à-vis traditional agriculture under some plausible conditions. Our results seem to be consistent when compared to some empirically robust conclusions found in the literature and some secondary data available on the FAO website. We also argue that the food insecurity problem gets aggravated as more and more countries engage in contract farming. Policy simulations identify critical parameters confirming the dominance of distribution over the growth effect in terms of a social welfare function. Simulations imply that there could be a food insecurity problem, as rises in GDP could result in increasing inequality so that government—to preserve social welfare—could restrict the extent of contract farming if non-food-producing sectors expand, causing terms-of-trade deterioration of food-importing nations.

The flourishing of IT-sector and IT-enabled services has led to emergence of different activities by leaps and bounds thanks to proliferation of Virtual plaform-based transactions, and E- commerce. However, massive layoffs started in 2022, as all tech giants encountered revenue declines amidst supply chain issues, inflation, Ukraine war, leading to deflation and fears of recession squeezing consumer and business spending. This has happened across the globe. In the context of the countries supplying low-wage labor (skilled wage in Indian Silicon Valley at Bengaluru is lower than that in the Californian Silicon Valley), similar episodes unfolded but to a different extent. The evidence suggests that layoffs in developing economies like India is much less than that in the US with limited impact on Indian industry despite severe global downturn. Jobs and hiring will move out of the developed markets to these emerging markets with cost advantages owing to lower salaries, as with low demand, drive to cutdown costs will induce firms to outsource some operations outside while focusing on core functions provided the cost of outsourcing is not too high. In this paper, we build a model to show how contraction in demand for IT-enabled works will determine how much of works to be completed in the US (home) and the remainder to be sourced out to say, India (abroad). We identify the conditions under which switching from pure domestic production to outsourcing using hired foreign workers will happen. We show that in both cases of perfectly competitive homogeneous product as well as in case of differentiated goods oligopoly scenarios that the hiring ceases drastically in the home while the outsourced workers will not suffer to a large extent. Home bears the burden of adjustment due to the sheer cost disadvantages of the home.

Being highly dependent on the oil sector, Azerbaijan suffered from economic downturn due to sharp fall in oil prices in 2015. However, such dependence creates development challenges for her. Simulated impact of prioritized economic reform policies—using a computable general equilibrium model (AZEORANI)—shows that, under the business-as-usual case with oil prices at 2011 level, it is projected to grow by 2.0% a year to 2030. However, consistent policy reforms enable enhanced growth by another 1.1 percentage points annually due to productivity boost and increased exports from non-oil sectors, viz., tourism and agriculture. In particular, following strategic roadmap, we consider baseline and policy shocks—10% improvement in productive efficiency, investment boost by 5% in non-mineral sector, and enhanced agricultural efficiency by 5%, and boost in tourism and transport by 10% via logistics-infrastructure, and technical progress in manufacturing over long run by 10–20% per annum. All these show that economic reforms have potentials to induce positive impact to overcome the binding constraints inhibiting growth and hence could promote economic development of Azerbaijan.

This paper attempts to build up a Heckscher-Ohlin-Samuelson model of production and trade where capital is introduced outside the production process as a financial capital or credit as per the classical Ricardian wage fund framework. Stock of credit or financial capital as past savings, finances employment and machines or capital goods used in the process of production with Ricardian fixed coefficient technology. We derive the relationship between factor prices and rate of interest on one hand and relative price and endowments on the other. Availability of finance does not impact production or pattern of trade only nominal factor prices. International financial flows will not alter pattern of trade, but movement of labour and machines will. Such results change drastically when we consider a model with unemployment and finance dictates real outcomes much more than before. Introducing finance affects trade patterns with unemployment and especially with imperfect credit markets. The results could explain a vast array of stylized facts such as, financial crisis or shock, credit rationing and their impact on production, trade and unemployment. The paper has policy implications for role of financial development, quality of institutions in economic development.