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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

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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    References listed on IDEAS

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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, 2012. "Short-Run Pain, Long-Run Gain : the Conditional Welfare Gains from International Financial Integration," Documents de recherche 12-14, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
    3. 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.
    4. 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.
    5. Valente, Simone, 2008. "Intergenerational transfers, lifetime welfare, and resource preservation," Environment and Development Economics, Cambridge University Press, vol. 13(01), pages 53-78, February.
    6. 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.
    7. 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 Group Munich.
    8. Simone Valente, 2009. "International status seeking, trade, and growth leadership," Canadian Journal of Economics, Canadian Economics Association, vol. 42(2), pages 554-589, May.
    9. 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.
    10. 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.
    11. Di Maria, Corrado & Valente, Simone, 2006. "The Direction of Technical Change in Capital-Resource Economies," MPRA Paper 1040, University Library of Munich, Germany.
    12. 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.
    13. Volker Grossmann & Thomas Steger, 2007. "Growth, Development, and Technological Change," CESifo Working Paper Series 1913, CESifo Group Munich.
    14. repec:spr:joecth:v:65:y:2018:i:2:d:10.1007_s00199-016-1019-7 is not listed on IDEAS
    15. Tomasz Brodzicki, 2005. "New empirical insights into the growth effects of economic integration within EU," International Trade 0505014, EconWPA.

    More about this item


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

    JEL classification:

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


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