Economic Integration and Endogenous Growth

Luis A. Rivera-Batiz, Paul M. Romer

NBER Working Paper No. 3528
Issued in December 1990
NBER Program(s):   EFG   ITI   IFM

In a world with two similar, developed economies, economic integration can cause a permanent increase in the worldwide rate of growth. Starting from a position of isolation, closer integration can be achieved by increasing trade in goods or by increasing flows of ideas. We consider two models with different specifications of the research and development sector that is the source of growth. Either form of integration can increase the long-run rate of growth if it encourages the worldwide exploitation of increasing returns to scale in the research and development sector.

(409 K)

Published: Quarterly Journal of Economics, Vol. CVI, No. 425, pp. 531-555, May 1991.

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