Powering Up Developing Countries through Integration?

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Powering Up Developing Countries through Integration? Terms of use: Documents in AbstractPower market integration is analyzed in a two countries model with nationally regulated firms and costly public funds. If generation costs between the two countries are too similar negative business-stealing outweighs efficiency gains so that following integration welfare decreases in both regions. Integration is welfare-enhancing when the cost difference between the two regions is large enough. The benefit from export profits increases total welfare in the exporting country, while the importing country benefits from lower prices. This is a case where market integration also improves the incentives to invest compared to autarky. The investment levels remain inefficient though. With generation facilities over-investment occurs sometimes, while systematic under-investment occurs for transportation facilities. Free-riding reduces the incentives to invest in these public-good components, while business-stealing tends to reduce the capacity for financing new investment.JEL-Code: L430, L510, F120, F150, R530.

Benefits of Regional Integration: Redefining the Concept

“…This criterion is applied most strictly to associations of developing economies, including post-Soviet countries. The understanding is that countries will not want to unite for the sake of achieving common benefits if the individual gain of each of them does not outweigh the potential losses (Krapohl, Vasileva-Dienes, 2019;Yoo-Duk Kang, 2016;Auriol, Biancini, 2013). To the best of our knowledge, the existing extensive literature on political motives of integration does not consider the question of whether successful associations with a net negative economic effect can exist.…”

17. Institutions for Infrastructure in Developing Countries: What we know . . . and the lot we still need to know

“…It is easy to forget that social rates of return are computed under the assumption that maintenance will take place over the lifetime of the assets, not just randomly subject to political decisions to allocated resources to budget or not.3 The degree of complexity is not linear in the level of government. For instance, supranationality complicates the optimal design of regulation but not always predictably(Auriol and Biancini (2015)). …”