<p><strong>Abstract:</strong> This research investigates the impacts of economic integration on endogenous growth by an application of the AK learning-by-doing model. Assuming that the knowledge that increases the productivity of labor will be created by accumulated capital, we divide economic integration into two different categories: one-way and two-way integration. The results show that two identical countries cannot have any benefits from economic integration. If two countries are different, the domestic country should only integrate with foreign countries that have a lower cost of capital of wage, or higher learning coefficient (the speed of transferring accumulated capital to knowledge) in the case of one-way integration. The same conclusion is still drawn in the case of two-way integration for two similar countries.</p><p><strong>Keywords</strong>: economic integration, endogenous growth, AK model</p>
Economic Integration and Endogenous Growth
