The Dynamics of Economic Integration

Desiree Desierto

DEGIT Conference Papers from DEGIT, Dynamics, Economic Growth, and International Trade

Abstract: 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.

Keywords: economic integration; institutions; technological change; evolutionary games (search for similar items in EconPapers)
Pages: 23 pages
Date: 2008-11
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