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Economic Integration and Political Disintegration

Author

Listed:
  • Enrico Spolaore
  • Alberto Alesina
  • Romain Wacziarg

Abstract

In a world of trade restrictions, large countries enjoy economic benefits, because political boundaries determine the size of the market. Under free trade and global markets even relatively small cultural, linguistic or ethnic groups can benefit from forming small, homogeneous political jurisdictions. 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. Firstly, the economic benefits of country size are mediated by the degree of openness to trade. Secondly, the history of nation-state creations and secessions is influenced by the trade regime.

Suggested Citation

  • Enrico Spolaore & Alberto Alesina & Romain Wacziarg, 2000. "Economic Integration and Political Disintegration," American Economic Review, American Economic Association, vol. 90(5), pages 1276-1296, December.
  • Handle: RePEc:aea:aecrev:v:90:y:2000:i:5:p:1276-1296
    Note: DOI: 10.1257/aer.90.5.1276
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F02 - International Economics - - General - - - International Economic Order and Integration
    • N40 - Economic History - - Government, War, Law, International Relations, and Regulation - - - General, International, or Comparative
    • F15 - International Economics - - Trade - - - Economic Integration

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