Economic Integration and Political Disintegration

48 Pages Posted: 13 Feb 1998 Last revised: 11 May 2000

See all articles by Alberto F. Alesina

Alberto F. Alesina

Harvard University - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Enrico Spolaore

Tufts University - Department of Economics

Romain T. Wacziarg

UCLA Anderson School of Management; National Bureau of Economic Research (NBER)

Date Written: September 1997

Abstract

Trade liberalization and political separatism go hand in hand. In a world of trade restrictions, large countries enjoy economic benefits because political boundaries determine the size of the market. In a world of free trade and global markets even relatively small cultural, linguistic or ethnic groups can benefit from forming small and homogeneous political jurisdictions that trade peacefully and are economically integrated with others. This paper provides a formal model of the relationship between openness and the equilibrium number and size of countries, and successfully tests two implications of the model. The first one is that the economic benefits of country size depend on and are mediated by the degree of openness to trade. The second is that the history of Nation-State creations and secessions is influenced by the trade regime.

Suggested Citation

Alesina, Alberto F. and Spolaore, Enrico and Wacziarg, Romain T., Economic Integration and Political Disintegration (September 1997). NBER Working Paper No. w6163. Available at SSRN: https://ssrn.com/abstract=56279

Alberto F. Alesina (Contact Author)

Harvard University - Department of Economics ( email )

Littauer Center
Cambridge, MA 02138
United States
617-495-8388 (Phone)
617-495-7730 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Enrico Spolaore

Tufts University - Department of Economics ( email )

Medford, MA 02155
United States

Romain T. Wacziarg

UCLA Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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