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The dynamics of economic integration : theory and policy

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Abstract

Integration a.ects 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.

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Paper provided by CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich in its series CER-ETH Economics working paper series with number 04/32.

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Length: 23 pages
Date of creation: Apr 2004
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Handle: RePEc:eth:wpswif:04-32

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Keywords: trade; economic integration; economic growth; scale e.ects; factor reallocation;

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Cited by:
  1. Simone Valente, 2006. "Trade, Envy and Growth: International Status Seeking in a Two-Country World," CER-ETH Economics working paper series 06/53, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
  2. Simone Valente, 2006. "Intergenerational Transfers, Lifetime Welfare and Resource Preservation," CER-ETH Economics working paper series 06/55, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
  3. Grossmann, Volker & Steger, Thomas M., 2007. "Growth, Development, and Technological Change," IZA Discussion Papers 2558, Institute for the Study of Labor (IZA).
  4. Klaus, WAELDE & Christina, WOOD, 2004. "The Empirics of Trade and Growth : Where are the Policy Recommendations ?," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2004013, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  5. Simone Valente, 2005. "Genuine Dissaving and Optimal Growth," Others 0505009, EconWPA.
  6. Simone Valente, 2009. "International status seeking, trade, and growth leadership," Canadian Journal of Economics, Canadian Economics Association, vol. 42(2), pages 554-589, May.
  7. Moritz Schularick & Thomas Steger, 2006. "Does Financial Integration Spur EconomicGrowth? New Evidence from the First Era of Financial Globalization," CESifo Working Paper Series 1691, CESifo Group Munich.
  8. Lutz Arnold, 2007. "A generalized multi-country endogenous growth model," International Economics and Economic Policy, Springer, vol. 4(1), pages 61-100, April.
  9. Tomasz Brodzicki, 2005. "New empirical insights into the growth effects of economic integration within EU," International Trade 0505014, EconWPA.
  10. Corrado Di Maria & Simone Valente, 2006. "The Direction of Technical Change in Capital-Resource Economies," CER-ETH Economics working paper series 06/50, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.

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