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Gumruk Birligi’Nin Firma Verimlilik Yakinsamasina Etkisi
[The impact of customs union on firm productivity convergence]

  • Aslan, Alper
  • Kaplan, Muhittin

Economic integration theory suggests that each member benefits from establishing a customs union; because the country that has relatively lower income will grow faster than the others, income and growth rates of all member countries will be equalised in the long-run. However, endogenous growth models show that this result depends on whether the level of technology transfer among member countries gets faster or not following the completion of integration. If the rate of technology transfer from an advanced member country (leader) in terms of the level of technology and income to the less advanced member (follower) increases following integration, the rate of growth and productivity of the follower increase, resulting in an equalisation of incomes and productivity convergence among member countries. In such a case that no technology transfer occurs among member countries, each member of the union reaches to their own steady states conducive to their technological and structural characteristics and therefore integration would not lead to convergence. For this reason, in order to determine whether integration will lead to productivity convergence, it is vitally important to uncover the determinants of productivity convergence for preparing economic policy packages which help to exploit the highest gains from integration.

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File URL: https://mpra.ub.uni-muenchen.de/10597/1/MPRA_paper_10597.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 10597.

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Date of creation: 2008
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Handle: RePEc:pra:mprapa:10597
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