Economic growth in a politically fragmented world

Byeongju Jeong

Journal of Comparative Economics, 2014, vol. 42, issue 2, 402-416

Abstract: I explore the effects of economic and political integration on economic growth in a model of vintage human capital and sequential intergenerational bargains. Adoption of a new technology raises not only the productivity but also the bargaining position of the future generations, creating a bias for the current generations to preserve the current technology. Economic integration (i.e., the sharing of frontier technology among countries) promotes growth if there is a diversity in human capital distribution or a coordination failure across countries. On the other hand, political integration (i.e., the merging of countries into a single bargain) promotes stagnation as it eliminates the diversity and coordination failures.

Keywords: Growth; Stagnation; Intergenerational bargain; Economic integration; Political fragmentation (search for similar items in EconPapers)
JEL-codes: N10 O40 (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jcecon:v:42:y:2014:i:2:p:402-416

DOI: 10.1016/j.jce.2013.05.005

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