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Factor Mobility and the Distribution of Economic Activity in Integrated Economies: Evidence and Implications

  • Harry P. Bowen
  • Haris Munundar
  • Jean-Marie Viaene

This study examines empirically factor mobility and distribution of economic activity under economic integration, with the result that the benchmark of the equal-share relationship holds strongly for US states and less so for EU countries, but does not hold for Developing Countries or the World. Recent research (Bowen, Munandar and Viaene, 2005) shows that for a country who is a member of a fully integrated economy, its shares of the integrated economy's total output and stocks of productive factors (i.e., physical and human capital) will be equal. They label this result the equal-share relationship. In this paper, we empirically examine for evidence of the equal-share relationship for alternative economic groups (i.e., US states, EU countries, Developing Countries and a World comprising 55 countries). Our findings indicate that the equal-share relationship holds strongly for US states, less so for EU countries, but does not hold for Developing Countries or the World.

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Paper provided by Directorate General Economic and Financial Affairs (DG ECFIN), European Commission in its series European Economy - Economic Papers with number 315.

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Length: 21 pages
Date of creation: Apr 2008
Date of revision:
Handle: RePEc:euf:ecopap:0315
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  1. Jeremy Greenwood & Boyan Jovanovic, 1989. "Financial Development, Growth, and the Distribution of Income," NBER Working Papers 3189, National Bureau of Economic Research, Inc.
  2. Summers, Robert & Heston, Alan, 1991. "The Penn World Table (Mark 5): An Expanded Set of International Comparisons, 1950-1988," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 327-68, May.
  3. Edison, Hali J. & Levine, Ross & Ricci, Luca & Slok, Torsten, 2002. "International financial integration and economic growth," Journal of International Money and Finance, Elsevier, vol. 21(6), pages 749-776, November.
  4. S Durlauf & Danny Quah, 1998. "The New Empirics of Economic Growth," CEP Discussion Papers dp0384, Centre for Economic Performance, LSE.
  5. Robert J. Barro & Jong-Wha Lee, 1993. "International Comparisons of Educational Attainment," NBER Working Papers 4349, National Bureau of Economic Research, Inc.
  6. Bowen, H.P. & Munandar, H. & Viaene, J.M., 2006. "The distribution of output in integrated economies: theory and evidence," Vlerick Leuven Gent Management School Working Paper Series 2006-32, Vlerick Leuven Gent Management School.
  7. Ross Levine, 1997. "Financial Development and Economic Growth: Views and Agenda," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 688-726, June.
  8. Barro, Robert J & Lee, Jong Wha, 1996. "International Measures of Schooling Years and Schooling Quality," American Economic Review, American Economic Association, vol. 86(2), pages 218-23, May.
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