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BY 4.0 license Open Access Published by De Gruyter Open Access January 9, 2019

Do economic and financial integration stimulate economic growth? A critical survey

  • Kizito Uyi Ehigiamusoe and Hooi Hooi Lean
From the journal Economics

Abstract

The recent vote by Britain to quit the European Union (EU) and the political pressures in some member countries to exit the EU necessitates a critical evaluation of the long-run economic benefits of economic integration or union to member countries. Consequently, this paper examines recent empirical studies on the nexus between economic integration and economic growth in developed and developing countries. It also investigates the literature concerning the impact of financial integration on economic growth. Evidence from the study shows that although other views exist, there is overwhelming support for the growthenhancing effects of economic integration, albeit common currency adoption has an insignificant effect on economic growth. The channels through which economic integration exerts its influence on economic growth include capital accumulation, productivity growth, trade, and financial integration. However, the study shows that the impact of financial integration on economic growth is inconclusive. Based on the findings, the study draws some implications and policy options.

JEL Classification: F15; G21; O47

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Received: 2018-04-05
Revised: 2018-09-02
Accepted: 2018-12-04
Published Online: 2019-01-09
Published in Print: 2019-12-01

© 2019 Kizito Uyi Ehigiamusoe et al., published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

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