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The authors examine the relationship between real and financial integration. Real integration is measured by productivities of capital and labor from trade data for 1982 to 1997. Financial integration is measured by the black market exchange rate. They find more evidence of convergence to equality for returns to capital than for returns to labor. There is some support for associating the convergence of black market premia with declines in black market premia. In this paper, they use the relative factor content of international trade to estimate the productivities of capital and labor and examine how changes in them from 1982 to 1997 are related to financial integration.
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