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The dynamics of economic integration: Theory and policy

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Author Info
Lucas Bretschger
Thomas M. Steger ()

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Abstract

Integration affects economic growth mainly through two different channels: The scale-effect channel and the factor-reallocation channel. In order to investigate both channels within a unifying framework, we employ a simple descriptive growth model. The scale-effect channel increases either the long-run growth rate or the level of the balanced growth path. The factor-reallocation channel is ambiguous. It is shown under which conditions this mechanism induces either a rise or a fall in the long-run growth rate. In addition, a number of policy conclusions are drawn. Copyright Springer-Verlag Berlin Heidelberg 2004

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File URL: http://hdl.handle.net/10.1007/s10368-004-0015-8
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Publisher Info
Article provided by Springer in its journal International Economics and Economic Policy.

Volume (Year): 1 (2004)
Issue (Month): 2 (January)
Pages: 119-134
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Handle: RePEc:kap:iecepo:v:1:y:2004:i:2:p:119-134

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Related research
Keywords: International trade; economic integration; economic growth; scale effects; factor reallocation; F1 (Trade); O4 (Economic Growth);

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  16. Vanhoudt, Patrick, 1998. "Did the European Unification Induce Economic Growth? In Search of Scale-Effects and Persistent Changes," Working Paper Series in Economics and Finance 270, Stockholm School of Economics. [Downloadable!]
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  17. Peretto, Pietro F, 1998. " Technological Change and Population Growth," Journal of Economic Growth, Springer, vol. 3(4), pages 283-311, December. [Downloadable!] (restricted)
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  21. Rivera-Batiz, Luis A & Romer, Paul M, 1991. "Economic Integration and Endogenous Growth," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 531-55, May. [Downloadable!] (restricted)
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