The paper studies a two-region economy , with two sectors and three factors of production : oil, capital and labor . The South exports oil in exchange for industrial goods from the North . There is a net capital inflow to the South . This equals the difference between its export revenues and...

The paper studies a two-region economy, with two sectors and three factors of production: oil, capital and labor. The South exports oil in exchange for industrial goods from the North. There is a net capital inflow to the South. This equals the difference between its export revenues and import...