Nation states vs. united empire: Effects of political competition on economic growth
Is the European nation-state system more favorable to economic growth than the united-empire system in ancient China? This paper develops an endogenous-growth model to analyze the conditions under which economic growth is higher under political fragmentation than political unification. Under political unification, the economy is vulnerable to excessive Leviathan taxation and the costs of unifying heterogeneous populations. Under political fragmentation, the competing rulers are constrained in taxation but spend excessively on military defense. If and only if the heterogeneity costs are sufficiently high relative to the mobility cost of citizens or equilibrium defense spending, then political fragmentation would be more favorable to growth than political unification. When the political regime is endogenously chosen by rulers, they do not always choose the growth-maximizing regime. In particular, there exists a range of values for the heterogeneity costs, in which political fragmentation is more favorable to growth but the rulers prefer political unification.
(This abstract was borrowed from another version of this item.)
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Pohjola, Matti, 1983. "Workers' investment funds and the dynamic inefficiency of capitalism," Journal of Public Economics, Elsevier, vol. 20(2), pages 271-279, March.
- repec:cup:cbooks:9780521637329 is not listed on IDEAS
- Overland, Jody & Simons, Kenneth L & Spagat, Michael, 2000.
"Political Instability and Growth in Dictatorships,"
CEPR Discussion Papers
2653, C.E.P.R. Discussion Papers.
- Jody Overland & Kenneth L. Simons & Michael Spagat, 2000. "Political Instability and Growth in Dictatorships," William Davidson Institute Working Papers Series 354, William Davidson Institute at the University of Michigan.
- Jody Overland, Kenneth Simons and Michael Spagat, 2003. "Political Instability and Growth in Dictatorships," Royal Holloway, University of London: Discussion Papers in Economics 03/11, Department of Economics, Royal Holloway University of London, revised Dec 2003.
- Cem Karayalçin, 2008. "Divided We Stand, United We Fall: The Hume-North-Jones Mechanism For The Rise Of Europe," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(3), pages 973-997, 08.
- Cellini, Roberto & Lambertini, Luca, 1998. "A Dynamic Model of Differentiated Oligopoly with Capital Accumulation," Journal of Economic Theory, Elsevier, vol. 83(1), pages 145-155, November.
- Xie, Danyang, 1997.
"On Time Inconsistency: A Technical Issue in Stackelberg Differential Games,"
Journal of Economic Theory,
Elsevier, vol. 76(2), pages 412-430, October.
- Danyang Xie, 2002. "On Time Inconsistency: A Technical Issue in Stackelberg Differential Games," Macroeconomics 0212004, EconWPA.
- Daron Acemoglu, 2007. "Introduction to Modern Economic Growth," Levine's Bibliography 122247000000001721, UCLA Department of Economics.
- Pohjola, Matti, 1983. "Nash and stackelberg solutions in a differential game model of capitalism," Journal of Economic Dynamics and Control, Elsevier, vol. 6(1), pages 173-186, September.
- Cellini, Roberto & Lambertini, Luca, 2002. "A differential game approach to investment in product differentiation," Journal of Economic Dynamics and Control, Elsevier, vol. 27(1), pages 51-62, November.
- Grossman, Herschel I. & Noh, Suk Jae, 1994. "Proprietary public finance and economic welfare," Journal of Public Economics, Elsevier, vol. 53(2), pages 187-204, February.
- Jeremy Edwards & Michael Keen, 1994.
"Tax competition and Leviathon,"
IFS Working Papers
W94/07, Institute for Fiscal Studies.
- Rauscher, Michael, 1998. "Leviathan and Competition among Jurisdictions: The Case of Benefit Taxation," Journal of Urban Economics, Elsevier, vol. 44(1), pages 59-67, July.
- Azam Chaudhry & Phillip Garner, 2006. "Political Competition Between Countries and Economic Growth," Review of Development Economics, Wiley Blackwell, vol. 10(4), pages 666-682, November.
When requesting a correction, please mention this item's handle: RePEc:kap:pubcho:v:145:y:2010:i:1:p:181-195. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn)or (Christopher F. Baum)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.