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Trade, Growth, and the Size of Countries

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  • Alberto Alesina
  • Enrico Spolaore
  • Romain Wacziarg

Abstract

Normally, economists take the size of countries as an exogenous variable which does need to be explained. Nevertheless, the borders of countries and therefore their size change, partially in response to economic factors such as the pattern of international trade. Conversely, the size of countries influences their economic performance and their preferences for international economic policies - for instance smaller countries have a greater stake in maintaining free trade. In this paper we review the theory and the evidence concerning a growing body of research that has considered both the impact of market size on growth and the endogenous determination of country size. We show that our understanding of economic performance and of the history of international economic integration can be greatly improved by bringing the issue of country size at the forefront of the analysis of growth.

Suggested Citation

  • Alberto Alesina & Enrico Spolaore & Romain Wacziarg, 2003. "Trade, Growth, and the Size of Countries," Harvard Institute of Economic Research Working Papers 1995, Harvard - Institute of Economic Research.
  • Handle: RePEc:fth:harver:1995
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    JEL classification:

    • O0 - Economic Development, Innovation, Technological Change, and Growth - - General

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