International capital movements reshape economies, altering income distribution and sector outputs.
The article explores how a small open economy deals with international capital and production. When the price of international capital goes up in one sector, it might leave the economy, but this can lead to capital moving between sectors. This can affect the prices of local resources and income distribution. Depending on factors like how much labor or resources are needed, output in different sectors can go up or down. The study also looks at how resource booms and Dutch disease can impact the economy.