Borders and Growth

64 Pages Posted: 5 Oct 2005

See all articles by Enrico Spolaore

Enrico Spolaore

Tufts University - Department of Economics

Romain T. Wacziarg

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

Multiple version iconThere are 3 versions of this paper

Date Written: August 2005

Abstract

This paper presents a framework to understand and measure the effects of political borders on economic growth and per capita income levels. In our model, political integration between two countries results in a positive country size effect and a negative effect through reduced openness vis-a-vis the rest of the world. Additional effects stem from possible changes in other growth determinants, besides country size and openness, when countries are merged. We estimate the growth effects that would have resulted from the hypothetical removal of national borders between pairs of adjacent countries under various scenarios. We identify country pairs where political integration would have been mutually beneficial. We find that full political integration would have slightly reduced an average country's growth rate, while most countries would benefit from a more limited form of merger, involving higher economic integration with their neighbors.

Keywords: Economic integration, economic growth, political unions

JEL Classification: F1, O5

Suggested Citation

Spolaore, Enrico and Wacziarg, Romain T., Borders and Growth (August 2005). CEPR Discussion Paper No. 5202. Available at SSRN: https://ssrn.com/abstract=821164

Enrico Spolaore

Tufts University - Department of Economics ( email )

Medford, MA 02155
United States

Romain T. Wacziarg (Contact Author)

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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