This paper has attempted to examine the consequences of a regime shift from the one of international immobility of health capital to the international mobility of health capital on the sizes of the different sectors of a small open developing in terms of a 3-sector general equilibrium model with a non-traded services sector (healthcare). In the basic model, there is no labour market distortion while in the extended model there is institutionally fixed wage in the sector that provides healthcare services. In this set-up, we have found that a regime shift of international immobility of capital to the international mobility of capital leads to a situation where one of the two traded sectors might vanish and leads to raise a question regarding the validity of trade-balance condition.
Health sector, International health capital mobility, Walras’ Law and General Equilibrium
