But high initial levels of integration are relatively independent of high speeds of integration. The positive effect of freer trade and foreign investment on growth is one factor explaining the relation between integration and growth. Simply put, such factors as technology transfer and learning, improved resource allocation, greater competition, and access to foreign capital help countries grow. But this is only one part of the interaction between integration and growth. Growth itself tends to promote integration.
Imports rise faster than incomes as consumers satisfy their desire for diversity.
The rising returns to capital associated with faster growth raise developing countries' capital goods imports. Fast-growing countries attract more foreign direct investment and obtain better credit terms. East Asia most clearly illustrates how rapid growth tends to project countries onto regional and world markets, while lack of growth, as in Sub-Saharan Africa, leads to marginalization in world goods and capital markets. The close association between growth and the speed of integration also suggests that both are likely to be affected by several common factors, including changes in the external environment, the evolution of the institutional setting, and the policies pursued by governments. Drawn from World Bank, Global Economic Prospects and the Developing Countries 1996, Washington, DC, 1996.