We develop a two-period trade-theoretic model for a recipient country with credit constraints and develop a necessary and sufficient condition for replacing foreign aid by credit to be welfare improving.

The paper uses a Hecksher-Ohlin-Samuelson type general equilibrium framework to consider the incidence of an outsourcing tax on an economy in which the production of a specific intermediate input has been fragmented and outsourced. If the outsourced sector provides a non-traded input, the...