Unilateral International Transfers and their Effects on the Welfare of the Recipient and Donor Countries

In: The Pakistan development review: PDR, Band 26, Heft 2, S. 135-160

Abstract

This paper analyses impacts of unilateral income and capital
transfers on welfare and terms of trade of the recipient and donor
countries within a two-country framework. Introduction of the external
economies of scale, helps in explicitly incorporating the differences in
factor endowment between developed and developing economies in the
analysis. The paper discusses the conditions under which unilateral
capital transfer from a developed country may yield paradoxical result,
i.e. immiserize the developing country, despite market stability. The
analysis reinforces Brecher and Choudhri's analytical support to
Singer-Prebisch thesis from a new angle.