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The Relevance of Krugman-Eichengreen’ s Effect, Theory of Comparative Advantage and Theory of Competitive Advantage for the Enlarged Europe Convergence Process


Stojanov, Dragoljub; Kandžija, Vinko
The Relevance of Krugman-Eichengreen’ s Effect, Theory of Comparative Advantage and Theory of Competitive Advantage for the Enlarged Europe Convergence Process // 50 years of European Union = L’ union europeenne a 50 ans : research monograph / Kumar, Andrej ; Kandžija, Vinko (ur.).
Rijeka: University of Rijeka, Faculty Economics, 2009. str. 51-66


Naslov
The Relevance of Krugman-Eichengreen’ s Effect, Theory of Comparative Advantage and Theory of Competitive Advantage for the Enlarged Europe Convergence Process

Autori
Stojanov, Dragoljub ; Kandžija, Vinko

Vrsta, podvrsta i kategorija rada
Poglavlja u knjigama, znanstveni

Knjiga
50 years of European Union = L’ union europeenne a 50 ans : research monograph

Urednik/ci
Kumar, Andrej ; Kandžija, Vinko

Izdavač
University of Rijeka, Faculty Economics

Grad
Rijeka

Godina
2009

Raspon stranica
51-66

ISBN
978-953-6148-76-9

Ključne riječi
Trade theories, growth, convergence, history, lessons, direction

Sažetak
We contemplate that the long term prospect and perspective of well-being of the enlarged Europe depends to great extent on the economic development of convergence process between wealthy (developed) and more or less (relatively speaking) poor members of the EU. Main-stream economic suggests trade liberalization both: internal and foreign as main driver for economic growth for all countries and regions in particular, regardless do one considers enlarged regional trade (internal trade between the members of the EU) or international trade between future members of the EU (Croatia, Bosnia and Herzegovina, Serbia) and the EU. Krugman-Eichengreeen's effect argues against the argument that trade and full economic liberalization between countries (regions) with different levels of economic development and well-being might be fruitful for both sides: more or less developed countries-regions. Moreover, the effect suggests rising income inequality over time between two unequally developed regions or countries. As much as the econometric work on the subject of causality between trade (inter- regional and foreign) and development is both: inconclusive and unreliable (Krugman, 2008 ; Rodrik, 1999) we rely more on historical proof for our attitude than on econometric work. We argue that government and policy advisers of future members of the EU (Bosnia and Herzegovina, Serbia, and Croatia) should stop thinking of international economic integration as an end in itself. We suggest that the causality between trade and growth runs as a causality not from trade to development but as direction from development to trade. In such a case an ex-post income convergence between new members (and future members) and “ old club” members could hardly be achieved without an active common developmental policy of the EU and a huge transfer of resources towards “ poor” members.

Izvorni jezik
Engleski

Znanstvena područja
Ekonomija



POVEZANOST RADA


Projekt / tema
081-0811403-1405 - Razvoj gospodarske konkurentnosti Hrvatske u procesu priključivanja EU (Vinko Kandžija, )
081-0811403-1416 - Europska monetarna unija i Republika Hrvatska (Dragoljub Stojanov, )

Ustanove
Ekonomski fakultet, Rijeka,
Sveučilište Libertas