Growth and the Enlargement of a Common Market

This paper explores the growth effects of the enlargement of a common market from two to three countries by making use of a three-country equilibrium growth model with heterogeneous labour. We prove that the enlargement will stimulate the backward countries’ economic growth. In addition, we also demonstrate that the higher the new member country’s average talent level is, the more likely it is that the enlargement can speed up the initial integrated-economy’s economic growth.