Trade, FDI, and congestion - the small and very open economy

Typically, a small and open economy trades goods at given world prices. Here, we present a model of a very open small economy, where capital and labor are internationally mobile, too. When investing into infrastructure, the economy’s government attracts not only mobile capital but mobile labor, also. These capital and
labor inflows into the economy reinforce each other. They contribute to rising welfare
for land owning indigenous households. But all potential benefits for land renting
immigrant households are capitalized into higher land rents. The paper is also an
attempt to give an account of the recent economic boom in Ireland.