Aid Allocation and the Transfer Paradox in a Small Country

This paper investigates long run consequences of international trade between two economies inhabited by two distinct races using different languages. If wages are not equal in autarky, free trade encourages the workers of the low-wage country to learn the language of the high-wage country. As the bilingual population increases in the low-wage country, products are increasingly produced in the dominant language version. In the long run the language of the high-wage country becomes universally adopted.