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The Dynamics of Economic Integration

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  • Desiree A. Desierto
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    Abstract

    We apply the co-evolutionary model of growth of Desierto (2008, 2005) to the process of integration to global/regional markets. Before markets are actually opened, firms start anticipating changes in the interest rate and play a first-stage (evolutionary) game whereby the quality of domestic institutions and technologies evolve. When markets are finally opened, the firms that produce at a relatively higher quality now supply the global/regional market, but compete with other global/regional firms by playing a second-stage (evolutionary) game that determines what the global standard for (institutional and technological) quality should be. The result is a comprehensive model that can explain all patterns of growth and per-capita convergence and/or divergence between economies.

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    Bibliographic Info

    Paper provided by DEGIT, Dynamics, Economic Growth, and International Trade in its series DEGIT Conference Papers with number c013_029.

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    Length: 23 pages
    Date of creation: Nov 2008
    Date of revision:
    Handle: RePEc:deg:conpap:c013_029

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    Keywords: economic integration; institutions; technological change; evolutionary games;

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