University of HelsinkiAbstract. Economic integration is examined in a multi-economy Schumpeterian growth model where economies differ in their research environment, and consequently in the productivity of R&D. It is shown that economies with more or less the same productivity of R&D integrate. In equilibrium, there can be many common markets with different growth rates as well as stagnating economies with decreasing relative income. A small economy with low incentives to save can avoid stagnation, if its R&D is so productive that a common market with a positive growth rate can accept it as a member. Download
Professor Emeritus