Gourinchas and Jeanne (2006) explain that the gains from capital market integration are small because the natural convergence of economies would have "done the work" of integration if it had not occurred. We provide a simple illustration of this standard theoretical argument using the simplest...

Capital (physical and human) doesn't flow from rich to poor countries. We show that in order to solve these twin paradoxes, assumption of externality of physical capital is better than assumption of externality of human capital