Abstract
This paper builds up a model of trade in intermediate goods and uses it to analyze certain fea tures of the colonial pattern of trade. Different parts of an interme diate good are traded between two nations and the intermediate good i s then used to make two country-specific products. The author discuss es the effects of technical progress in different sections of the pro ductive spectrum on factoral terms of trade and allocation of resourc es in each country. In a three-country, two-good, colonial world it i s shown that immiserization can occur even with given commodity terms of trade. Copyright 1987 by The Review of Economic Studies Limited.
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