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Rise and Fall of Empires in the Industrial Era: A Story of Shifting Comparative Advantages

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  • Cosar, Kerem
  • Bonfatti, Roberto

Abstract

The last two centuries witnessed the rise and fall of empires. We construct a model which rationalises this in terms of the changing trade gains from empires. In the model, empires are arrangements that reduce trade cost between an industrial metropole and the agricultural periphery. During early industrialisation, the value of such bilateral trade increases, and so does the value of empires. As industrialisation diffuses, and as manufactures become more differentiated, trade becomes more multilateral and intra-industry, reducing the value of empires. Our results are consistent with long-term changes in income distribution and trade patterns, and with previous historical arguments.

Suggested Citation

  • Cosar, Kerem & Bonfatti, Roberto, 2022. "Rise and Fall of Empires in the Industrial Era: A Story of Shifting Comparative Advantages," CEPR Discussion Papers 17482, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:17482
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    Keywords

    International trade; Empires; Comparative advantage; Optimal country size;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • F5 - International Economics - - International Relations, National Security, and International Political Economy
    • N7 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services

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