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The dynamics of economic integration: Theory and policy

  • Lucas Bretschger
  • Thomas M. Steger

    ()

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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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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