Free trade commodities has often been considered to lead to the optimum allocation of resources between countries. If factor returns are not equalized by such trade, further gains can be obtained by allowing national factors access to world markets. But if technology, in the form of blueprints,...

An increased foreign capital inflow into a protected sector is generally immiserizing. We show that if the protected sector produces an intermediate input, positive welfare effects may emerge. A striking result is that it might lead to an increased import-demand for the intermediate input which...

The concept of factor intensity has played a key role in the development of international trade theory. The factor proportions utilized in the production of commodities differ from activity to activity. Some commodities employ a higher ratio of capital to labor than do others, and the basic...

We use a general equilibrium framework with training costs to characterize a special economic zone which uses foreign capital and local labor. Competitive equilibrium without government intervention leads to "overflow" of local labor in the foreign enclave. A sector-specific wage tax implements...