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The dynamics of economic integration: Theory and policy

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  • Lucas Bretschger
  • Thomas M. Steger

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

Suggested Citation

  • Lucas Bretschger & Thomas M. Steger, 2004. "The dynamics of economic integration: Theory and policy," International Economics and Economic Policy, Springer, vol. 1(2), pages 119-134, January.
    • Handle: RePEc:kap:iecepo:v:1:y:2004:i:2:p:119-134
    DOI: 10.1007/s10368-004-0015-8
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    Cited by:

    1. Lutz Arnold, 2007. "A generalized multi-country endogenous growth model," International Economics and Economic Policy, Springer, vol. 4(1), pages 61-100, April.
    2. Raouf Boucekkine & Giorgio Fabbri & Patrick A. Pintus, 2018. "Short-run pain, long-run gain: the conditional welfare gains from international financial integration," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 65(2), pages 329-360, March.
    3. Klaus Wälde & Christina Wood, 2004. "The empirics of trade and growth: where are the policy recommendations?," International Economics and Economic Policy, Springer, vol. 1(2), pages 275-292, January.
    4. Raouf Boucekkine & Giorgio Fabbri & Patrick A. Pintus, 2018. "Short-run pain, long-run gain: the conditional welfare gains from international financial integration," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 65(2), pages 329-360, March.
    5. Moritz Schularick & Thomas Steger, 2006. "Does Financial Integration Spur Economic Growth? New Evidence from the First Era of Financial Globalization," CESifo Working Paper Series 1691, CESifo.
    6. Simone Valente, 2005. "Genuine dissaving and optimal growth," CER-ETH Economics working paper series 05/38, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    7. Sjak Smulders, 2004. "International capital market integration: Implications for convergence, growth, and welfare," International Economics and Economic Policy, Springer, vol. 1(2), pages 173-194, January.
    8. Agnieszka Gehringer & Inmaculada Martinez-Zarzoso & Felicitas Nowak.Lehmann Danziger, 2013. "The Determinants of Total Factor Productivity in the EU: Insights from Sectoral Data and Common Dynamic Processes," EcoMod2013 5343, EcoMod.
    9. Tomasz Brodzicki, 2005. "Econometric Analysis of Impact of Relative Location on the Growth Effects of Economic Integration. The case of the EU," Working Papers of Economics of European Integration Division 0603, The Univeristy of Gdansk, Faculty of Economics, Economics of European Integration Division, revised Jan 2006.
    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.
    11. Volker Grossmann & Thomas Steger, 2007. "Growth, Development, and Technological Change," CESifo Working Paper Series 1913, CESifo.
    12. Simone Valente, 2009. "International status seeking, trade, and growth leadership," Canadian Journal of Economics, Canadian Economics Association, vol. 42(2), pages 554-589, May.
    13. Jakub Growiec, 2005. "Dynamika konwergencji Polski z Unią Europejską," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 5-6, pages 101-118.
    14. Valente, Simone, 2008. "Intergenerational transfers, lifetime welfare, and resource preservation," Environment and Development Economics, Cambridge University Press, vol. 13(1), pages 53-78, February.
    15. Tomasz Brodzicki, 2005. "New empirical insights into the growth effects of economic integration within EU," International Trade 0505014, University Library of Munich, Germany.
    16. Valente, Simone, 2006. "Trade, Envy and Growth: International Status Seeking in a Two-Country World," MPRA Paper 1095, University Library of Munich, Germany.
    17. CALISKAN, Ozgur, 2011. "Eski ve Yeni Bölgeselleşme Olguları: Karşılaştırmalı Bir Analiz [Old and New Regionalism: A Comparative Analysis]," MPRA Paper 56611, University Library of Munich, Germany.
    18. Tomasz Brodzicki, 2006. "The scale of internal market and the growth effects of regional economic integration. The case of the EU," Working Papers of Economics of European Integration Division 0601, The Univeristy of Gdansk, Faculty of Economics, Economics of European Integration Division.
    19. Tomasz Brodzicki, 2005. "Relative Centrality or Peripheriality and the Growth Effects of Relative Centrality or Peripheriality and the Growth Effects of Economic Integration within the European Union," International Trade 0510005, University Library of Munich, Germany.

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    JEL classification:

    • F1 - International Economics - - Trade
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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