The dynamics of economic integration: Theory and policy

Lucas Bretschger and Thomas Steger

International Economics and Economic Policy, 2004, vol. 1, issue 2, 119-134

Abstract: Integration affects economic growth mainly through two different channels: The scale-effect channel and the factor-reallocation channel. In order to investigate both channels within a unifying framework, we employ a simple descriptive growth model. The scale-effect channel increases either the long-run growth rate or the level of the balanced growth path. The factor-reallocation channel is ambiguous. It is shown under which conditions this mechanism induces either a rise or a fall in the long-run growth rate. In addition, a number of policy conclusions are drawn. Copyright Springer-Verlag Berlin Heidelberg 2004

Keywords: International trade; economic integration; economic growth; scale effects; factor reallocation; F1 (Trade); O4 (Economic Growth) (search for similar items in EconPapers)
Date: 2004
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DOI: 10.1007/s10368-004-0015-8

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