Theorem 2 (Samuelson-Mundell): At a Walras-stable equilibrium of the world economy, an exogenous increase in unilateral income-transfer (i) improves (deteriorates) the terms of trade for the recipient country if that country imports the non-numeraire good and, compared with the donor country, has smaller (higher) marginal propensity to spend on the non-numeraire good, and (ii) immiserizes the donor country and enriches the recipient country.

immiserize the developing country, despite market stability.

Leontief (1936)demonstrated that an international transfer of purchasing power can paradoxically immiserize the recipient country and enrich the donor country, through an improvement in the terms of trade (a secondary effect) for the donor.

it will immiserize the recipient country and enrich the donor country through changes in terms of trade.

The paper establishes the conditions under which a capital transfer from a developed country may immiserize a developing country.

Theorem 4: At the Walras-stable equilibrium of the world economy, a set of sufficient conditions for a capital transfer to enrich country [beta] and immiserize country [alpha] is (i) [z.sup.[beta]] > [y.sup.[beta].sub.k] [greater than or equal to] (ii) [y.sup.[alpha].sub.k], (iii) [x.sup.i.sub.m] [greater than or equal to] 0, and (iv) [r.sup.[alpha]] [greater than or equal to] [r.sup.[beta]].

(9) They have demonstrated that if the primary-product exports of the developing countries are capital-intensive, then the process of foreign investment can immiserize the developing country through a deterioration of their terms of trade.

It has been shown in the previous section that a unilateral transfer can immiserize the recipient country only through a deterioration of her terms of trade.

the transfer may immiserize the developing recipient country through a deterioration of its terms of trade and enrich the developed donor country despite the world equilibrium as well as the equilibrium of each country being stable.

Therefore, capital transfer from the latter to the former can simultaneously immiserize both the countries and, hence, the world as a whole.