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Common markets, economic growth, and creative destruction

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  • Tapio Palokangas

Abstract

Economic integration is examined in a multi-economy Schumpeterian growth model where economies differ in their research environment, and consequently in the productivity of R&D. It is shown that economies with more or less the same productivity of R&D integrate. In equilibrium, there can be many common markets with different growth rates as well as stagnating economies with decreasing relative income. A small economy with low incentives to save can avoid stagnation, if its R&D is so productive that a common market with a positive growth rate can accept it as a member. Copyright Springer-Verlag 2005

Suggested Citation

  • Tapio Palokangas, 2005. "Common markets, economic growth, and creative destruction," Journal of Economics, Springer, vol. 86(1), pages 57-76, December.
    • Handle: RePEc:kap:jeczfn:v:86:y:2005:i:1:p:57-76
    DOI: 10.1007/BF03051800
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    More about this item

    Keywords

    endogenous growth; convergence; economic integration; F15; F21; O40;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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