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The Dynamics of Economic Integration

  • Desiree A. Desierto
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    We apply the co-evolutionary model of growth of Desierto (2008, 2005) to the process of integration to global/regional markets. Before markets are actually opened, firms start anticipating changes in the interest rate and play a first-stage (evolutionary) game whereby the quality of domestic institutions and technologies evolve. When markets are finally opened, the firms that produce at a relatively higher quality now supply the global/regional market, but compete with other global/regional firms by playing a second-stage (evolutionary) game that determines what the global standard for (institutional and technological) quality should be. The result is a comprehensive model that can explain all patterns of growth and per-capita convergence and/or divergence between economies.

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    File URL: http://degit.sam.sdu.dk/papers/degit_13/c013_029.pdf
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    Paper provided by DEGIT, Dynamics, Economic Growth, and International Trade in its series DEGIT Conference Papers with number c013_029.

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    Length: 23 pages
    Date of creation: Nov 2008
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    Handle: RePEc:deg:conpap:c013_029
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