International technology transfer: Who gains and who loses?

Abstract

When one country has a superior technology in all commodities, a Ricardian model with two goods and two countries is used to examine uncompensated transfers of superior technology in one or both goods. A transfer of the superior but second-best technology always benefits the advanced country because it was improting that good initially and now gets it cheaper. But the free gift of the first-best technology can also benefit the advanced country if a certain productivity condition is satisfied because that country may now export its former import good at an even better terms of trade. © 2007 The Authors; Journal compilation © 2007 Blackwell Publishing Ltd.