Recently the major issue in the international aspects of economic development has been the so-called dialogue in connection with the UN resolutions calling for a New International Economic Order. The intellectual basis for the proposed reforms, in so far as one exists, appears to lie in the well-known writings of Raul Prebisch and Hans Singer. Both of them argue that there is a fundamental asymmetry in the workings of the global economic system which biases the resulting income distribution in favor of the industrial North and against the predominantly primary producing South. Neither writer has been successful in putting forward convincing arguments for such asymmetry. The standard trade theory of the HeckscherOhlin variety is usually presented in such a way that countries A and B are identical in all respects except for a difference in factor proportions that leads to pretrade product and factor-price differentials that are removed by free trade. There is no room for any asymmetry here. It would therefore seem to be both relevant and interesting to construct and investigate models that exhibit the PrebischSinger asymmetry at the level of rigor that generally prevails in pure trade theory. The rest of this paper will present two examples of such models from current research. The first consists of a simple diagrammatic exposition of an interesting but heavily mathematical paper by Murray Kemp and M. Ohyama and the second outlines the essential features of an approach to the analysis of North-South economic relations found in my earlier paper. 1. The Kemp-Ohyama Model

This paper constructs a model of trade in which an intermediate good is produced by an "Austrian" point-input-point-output process of variable duration while the finished good is produced instantaneously by labor alone. The rate of time preference is a function of the level of stationary consumption and the two countries differ in the rate at which they discount the future. It is shown that the less "impatient" country will export the time-intensive intermediate good and import the finished good, with both countries incompletely specialized and the rate of interest and real wage equalized.

This paper constructs a model of trade in which an intermediate good is produced by an "Austrian" point-input-point-output process of variable duration while the finished good is produced instantaneously by labor alone. The rate of time preference is a function of the level of stationary consumption and the two countries differ in the rate at which they discount the future. It is shown that the less "impatient" country will export the time-intensive intermediate good and import the finished good, with both countries incompletely specialized and the rate of interest and real wage equalized.

This paper presents a theoretical model of slavery and manumission in which the effective labor provided by slaves is a function of both the level of supervision costs incurred by the owner and the incentive payments received by the slaves. The optimal combination of supervision costs and incentive payments is determined together with the input of physical capital. The length of time it would take for a slave to purchase his freedom out of savings from his incentive payments is derived and is shown to vary inversely with the rate of interest.

The paper incorporates the formation of human capital into the two-factor, two-good model of international trade. Workers can choose between being unskilled and earning the corresponding wage or obtaining an education that enables them to earn a higher wage. The wages of skilled and unskilled labor and the direct and indirect costs of education are all determined endogenously, along with the terms of trade and the pattern of comparative advantage. The implications of the model are consistent with the extensive empirical research on the role of human capital in explaining patterns of comparative advantage.

The paper incorporates the formation of human capital into the two-factor, two-good model of international trade. Workers can choose between being unskilled and earning the corresponding wage or obtaining an education that enables them to earn a higher wage. The wages of skilled and unskilled labor and the direct and indirect costs of education are all determined endogenously, along with the terms of trade and the pattern of comparative advantage. The implications of the model are consistent with the extensive empirical research on the role of human capital in explaining patterns of comparative advantage.

The problem of how to determine the appropriate shadow prices of primary inputs for the evaluation of new projects in an open economy subject to distortions is discussed. These shadow prices are compared with the corresponding free-trade and actual market prices. It is shown that if the distortion is an output subsidy or tax on existing production, the optimal intervention for new projects is subsidies and taxes on primary factors equal to the difference between the shadow prices and the market prices and not an output subsidy or single shadow exchange rate to provide offsetting protection for the new project. It is also shown that projects viable under free trade may reduce welfare if they are introduced into a distorted economy, while projects that would increase welfare in these circumstances might not be viable under free trade.