# The dynamics for the mean and the covariance matrix elements

The dynamic equation for the two means is given by and

where we assume that g_{2} > *g _{1},* that is, block 1 receives an inflow of resources from block 2. The three dynamic equations for the elements of the covariance matrix are

where * x* is a vector with elements к

_{1Д}, к

_{2},

_{2}, and к

_{12}, and

*has elements Kj and к*

**m**_{2}.

The matrix * D* is defined by

where *2***g*** _{1} = m ~* W and the matrix

*is defined by*

**H**

We use the Laplace transforms to solve the dynamic equations.

First, we assume that the two blocks of economies are expected to grow at the same rate,

Next, we set

where we recall that **g*** _{2} >* g

_{1}by assumption, in other words,

**g***= m~*

_{1}

**v***,*and

**g**

**2***=m+*

**v***.*

Solving the elements of the covariance matrix is straightforward. The cross term к_{12} goes to zero asymptotically. This indicates that the growth patterns of the two economies asymptotically becomes uncorrelated.

# The behaviour of the coefficients of variation

From the dynamic equations for the means, we derive their Laplace transform equations as

and

where Д_{х} = (s - gjX s - g_{2}) + n^{2} = (s - *m* )^{2}.

The matrix Д has two equal roots m=(g_{2}~ gi)/2 by choice.

Collect (k_{: :}, k_{2 2}, к_{12} ), as a three-dimensional vector x, and (k_{:}, k_{2} ) as a two-dimensional vector y.

Solving the equation is straightforward. The results are that we have and

In words, block i, which is an exporting sector of capital goods or labor, is self-averaging, but block 2 is non-self-averaging. This result is interesting since the block of economies that is importing the factor of production such as labor or innovations is self-averaging but the exporting block is not self-averaging.