International Factor Mobility and Environment in a Dual Agricultural Economy

The purpose of this study is to investigate the environmental implications of international factor movements in developing countries under agricultural dualism. Utilizing a general equilibrium model that incorporates a modern agricultural sector at different stages, we examine the effects of international factor movements on the environment. At the beginning of the modern agricultural sector, international labor movement has no influence on the environment in developing countries. Additionally, if the share of modern agricultural capital in the economy reaches a certain threshold, international capital inflow improves the environment, while capital outflow harms it. Conversely, when the modern agricultural capital share remains below this threshold, capital inflow leads to environmental harm, whereas capital outflow contributes to environmental improvement. However, after the popularization of modern agriculture, both international labor and capital movements affect the environment in a similar manner: factor inflow adversely affects the environment, whereas outflow enhances it. Consequently, the compatibility of international factor movement with environmental protection in a developing country becomes plausible.