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The Sustainability of Empire in Global Perspective: The Role of International Trade Patterns

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  • Roberto Bonfatti

Abstract

European empires had two key economic aspects: the extraction of colonial wealth by colonizers, and the relevance of trade for the colonial economies. I build a simple model of decolonization that puts these two elements at centre stage. By controlling policy in the colony, the mother country can appropriate part of her wealth; the colony, however, can stage a successful revolution at a stochastic cost. I incorporate this mechanism in a three-country, two-good trade model where countries (the mother country, the colony and a third independent country) can decide whether to trade with each other, and revolution is expected to generate trade frictions between the mother country and the rebel colony. Thus, the attractiveness of revolution and the sustainability of empire come to depend on the capacity of the rebel colony to access international markets, which, in turn, depends on the economic fundamentals that shape the pattern of trade as well as the optimal trade policy of the third country. I present detailed historical evidence showing how to use this model to put a few important cases of decolonization in global perspective. My results have important implications for the debate on the economic legacy of colonial empires.

Suggested Citation

  • Roberto Bonfatti, 2012. "The Sustainability of Empire in Global Perspective: The Role of International Trade Patterns," CESifo Working Paper Series 3857, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_3857
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    Cited by:

    1. Ben Li & Penglong Zhang, 2016. "International Geopolitics," Boston College Working Papers in Economics 909, Boston College Department of Economics, revised 06 Feb 2017.

    More about this item

    Keywords

    colonial trade; decolonization; international determinants of secession; American Revolution; independence of Spanish and Portuguese America;

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • F10 - International Economics - - Trade - - - General
    • N40 - Economic History - - Government, War, Law, International Relations, and Regulation - - - General, International, or Comparative

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