Mobility of Capital and Health Sector:A Trade Theoretic Analysis

In this paper we formulate a three-sector general equilibrium model where two sectors produce final traded goods whereas a third sector produces a non-traded final good. We refer to the third sector as a non-traded final goods producing health sector. In such a set up we have shown that a movement from a regime of international health capital immobility to a regime of international health capital mobility may lead to an expansion of the health sector. Next we have considered a variant of the basic model and we have shown that the output of the health sector must go up in case of international health capital mobility. Finally in the variant of the model we have shown that a movement from a regime of international capital immobility to a regime of international capital mobility may lead to a contraction of the health sector and one of the sectors (either Agricultural or Manufacturing) vanishes