ABSTRACT

It has long been known that, in the familiar 2 X 2 X 2 context of two primary factors, two no-joint-product constant-returns industries and two free-trading countries, uniform Hicksian technical progress in one country necessarily benefits the other country if preferences in the progressive country are homothetic and if initially there is some international trade; see, for example, Hicks (1953) and Ikema (1969). It is now known that the same is true if produced inputs are allowed, if capital is internationally mobile and even if one of the countries has an optimal tariff in place; see Kemp et al. (1993). And it may be added that the proposition remains true if joint production is allowed; indeed, the proof provided by Kemp et al is already sufficiently general to accommodate joint production. Finally, it is worthy of emphasis that the proposition is global in scope, that is it is valid for technical improvements of all magnitudes; but the proof of this fmal proposition must wait for another occasion.