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Common Market and Equilibrium Growth

Author

Listed:
  • Cheng-te Lee

    (Department of International Trade, Chinese Culture University, Taiwan)

  • Chen Fang

    (Department of International Trade, Takming University of Science and Technology, Taiwan)

  • Kuo-hsing Kuo

    (Department of International Trade, Chinese Culture University, Taiwan)

Abstract

We set up a two-sector equilibrium growth model with heterogeneous labor to analyze the impact of the creation of common market on the member countries' growth rate. We show that the economic integration will stimulate the backward country's economic growth. In addition, we prove that whether the economic integration can speed up the advanced country's economic growth or not depends on not only the average talent level of the backward country but also the size of the integrated-economy.

Suggested Citation

  • Cheng-te Lee & Chen Fang & Kuo-hsing Kuo, 2014. "Common Market and Equilibrium Growth," Economics Bulletin, AccessEcon, vol. 34(1), pages 480-493.
    • Handle: RePEc:ebl:ecbull:eb-13-00353
    as

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    References listed on IDEAS

    as
    1. Cheng-te Lee, 2009. "The Enlargement of an Integrated Economy and Growth," Economics Bulletin, AccessEcon, vol. 29(2), pages 1499-1509.
    2. Harald Badinger, 2005. "Growth Effects of Economic Integration: Evidence from the EU Member States," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 141(1), pages 50-78, April.
    3. Becker, Sascha O. & Egger, Peter H. & von Ehrlich, Maximilian, 2012. "Too much of a good thing? On the growth effects of the EU's regional policy," European Economic Review, Elsevier, vol. 56(4), pages 648-668.
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    5. Alwyn Young, 1998. "Growth without Scale Effects," Journal of Political Economy, University of Chicago Press, vol. 106(1), pages 41-63, February.
    6. Michael Kremer, 1993. "The O-Ring Theory of Economic Development," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(3), pages 551-575.
    7. Das Satya P, 2005. "Vertical Diversity, Communication Gap and Equilibrium Growth," The B.E. Journal of Macroeconomics, De Gruyter, vol. 5(1), pages 1-42, November.
    8. Ethier, Wilfred, 1979. "Internationally decreasing costs and world trade," Journal of International Economics, Elsevier, vol. 9(1), pages 1-24, February.
    9. Rebelo, Sergio, 1991. "Long-Run Policy Analysis and Long-Run Growth," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 500-521, June.
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    13. Philippe Aghion & Steven Durlauf (ed.), 2005. "Handbook of Economic Growth," Handbook of Economic Growth, Elsevier, edition 1, volume 1, number 1.
    14. Ethier, Wilfred J, 1982. "National and International Returns to Scale in the Modern Theory of International Trade," American Economic Review, American Economic Association, vol. 72(3), pages 389-405, June.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    diversity; talent distribution; common market; equilibrium growth;
    All these keywords.

    JEL classification:

    • F0 - International Economics - - General

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