Abstract
We incorporate entrepreneur capital mobility into the model of Antras and Caballero (2009) and find that for a small country, different types of capital tend to migrate in opposite directions, which makes the question of whether trade integration and net capital inflow are complements or substitutes not so straightforward. Therefore, whether protectionism is an improper response to global imbalance as claimed by AC deserves further investigation. In addition, we find that the mode of capital mobility impacts the relative incomes of workers and capitalists, and threaten the existence of the small country's financially-constrained production sector.