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The economics of political borders

In: Economic Analysis of International Law

Author

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  • Enrico Spolaore

Abstract

Why do countries break up? What are the costs and benefits of secessions? When are secessions efficient or inefficient from an economic perspective? How is political disintegration related to globalization and democratization? Do decentralization and federalism affect the incentives to secede? How is the size of nations impacted by conflict and wars? These complex questions, traditionally addressed by historians and political scientists, are now also at the center of a growing economics literature on the formation and breakup of sovereign states and political unions. This paper presents concepts and results from this line of economic analysis. First, we discuss the key trade-off between economies of scale in the provision of public good and political costs from heterogeneity of preferences. Second, we present four economic perspectives on the formation of borders: efficient borders, borders as democratic outcomes, borders in a world of rent-seeking Leviathans, and borders as outcomes of conflict and wars. Finally, we provide an analytical illustration of the basic ideas within a simple framework.

Suggested Citation

  • Enrico Spolaore, 2016. "The economics of political borders," Chapters, in: Eugene Kontorovich & Francesco Parisi (ed.), Economic Analysis of International Law, chapter 1, pages 11-43, Edward Elgar Publishing.
    • Handle: RePEc:elg:eechap:14307_1
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    Cited by:

    1. is not listed on IDEAS
    2. Jordan Adamson & Erik O. Kimbrough, 2018. "The Supply Side Determinants of Territory and Conflict," Working Papers 18-10, Chapman University, Economic Science Institute.
    3. Qiang Chen, 2014. "Natural Disasters, Ethnic Diversity, and the Size of Nations: Two Thousand Years of Unification and Division in Historical China," SDU Working Papers 2014-01, School of Economics, Shandong University.

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    JEL classification:

    • N41 - Economic History - - Government, War, Law, International Relations, and Regulation - - - U.S.; Canada: Pre-1913

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