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Globalization and Political Structure

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Listed:
  • Gino Gancia
  • Giacomo A.M. Ponzetto
  • Jaume Ventura

Abstract

This paper develops a theoretical framework to study the interaction between globalization and political structure. We show that political structure adapts in a non- monotonic way to declining transport costs. Borders hamper trade. At an earlier stage, the political response to expanding trade opportunities consists of removing borders by increasing country size. At a later stage, instead, it consists of removing the cost of borders by creating international unions. This leads to a reduction in country size. Moreover, diplomacy replaces conquest as a tool to ensure market access. These predictions are consistent with historical evidence on trade, territorial changes and membership of international unions.

Suggested Citation

  • Gino Gancia & Giacomo A.M. Ponzetto & Jaume Ventura, 2016. "Globalization and Political Structure," Working Papers 878, Barcelona Graduate School of Economics.
    • Handle: RePEc:bge:wpaper:878
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    References listed on IDEAS

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    Cited by:

    1. Forslid, Rikard & Nyberg, Sten, 2017. "Brexit - balancing trade and mobility?," CEPR Discussion Papers 12370, C.E.P.R. Discussion Papers.
    2. Gancia, Gino & Ponzetto, Giacomo A.M. & Ventura, Jaume, 2020. "A theory of economic unions," Journal of Monetary Economics, Elsevier, vol. 109(C), pages 107-127.
    3. Joan Esteban & Sabine Flamand & Massimo Morelli & Dominic Rohner, 2017. "The Survival and Demise of the State: A Dynamic Theory of Secession," Working Papers 609, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    4. Bonfatti, Roberto, 2017. "The sustainability of empire in a global perspective: The role of international trade patterns," Journal of International Economics, Elsevier, vol. 108(C), pages 137-156.
    5. Joan Esteban & Sabine Flamand & Massimo Morelli & Dominic Rohner, 2018. "A Dynamic Theory of Secession," CESifo Working Paper Series 7257, CESifo.
    6. Arnorsson, Agust & Zoega, Gylfi, 2018. "On the causes of Brexit," European Journal of Political Economy, Elsevier, vol. 55(C), pages 301-323.
    7. Suesse, Marvin, 2019. "Adjusting the size of nations: Empirical determinants of separatism and the Soviet breakup," Journal of Comparative Economics, Elsevier, vol. 47(1), pages 50-64.
    8. Kitamura, Shuhei & Lagerlöf, Nils-Petter, 2021. "Cities, Conflict, and Corridors," OSF Preprints cfrzs, Center for Open Science.

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    More about this item

    Keywords

    globalization; political structure; size of countries; international unions;
    All these keywords.

    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • F15 - International Economics - - Trade - - - Economic Integration
    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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