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Unified China and Divided EuropeChiu Yu KoNational University of Singapore (NUS) - Department of Economics Mark KoyamaGeorge Mason University - Department of Economics; George Mason University - Mercatus Center Tuan-Hwee SngNational University of Singapore (NUS) - Department of Economics December 5, 2014 Abstract: This paper studies the causes and consequences of political centralization and fragmentation in China and Europe. We argue that the severe and unidirectional threat of external invasion fostered political centralization in China while Europe faced a wider variety of smaller external threats and remained politically fragmented. We test our hypothesis using data on the frequency of nomadic attacks and the number of regimes in China. Our model allows us to explore the economic consequences of political centralization and fragmentation. Political centralization in China led to lower taxation and hence faster population growth during peacetime than in Europe. But it also meant that China was relatively fragile in the event of an external invasion. Our results are consistent with historical evidence of warfare, capital city location, tax levels, and population growth in both China and Europe.
Number of Pages in PDF File: 59 Keywords: China, Europe, Great Divergence, Political Fragmentation, Political Centralization JEL Classification: N33, N35, N43, N45, H56 Date posted: January 23, 2014 ; Last revised: December 6, 2014Suggested CitationContact Information
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