Trade liberalization and political separatism go hand in hand. In a world of trade restrictions, large countries enjoy economic benefits because political boundaries determine the size of the market. In a world of free trade and global markets even relatively small cultural, linguistic or ethnic gro...

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Bibliographic Details

Main Authors:	Alesina, Alberto 1957-2020 (Author), Spolaore, Enrico (Author), Wacziarg, Romain (Author)
Format:	Book
Language:	English
Published:	Cambridge, Mass. 1997
Series:	NBER working paper series 6163
Subjects:	Politik Wirtschaft Ökonometrisches Modell Free trade > Political aspects > Econometric models International economic integration > Econometric models States, Small > Commercial policy > Econometric models States, Small > Economic conditions > Econometric models
Online Access:	Volltext Volltext
Summary:	Trade liberalization and political separatism go hand in hand. In a world of trade restrictions, large countries enjoy economic benefits because political boundaries determine the size of the market. In a world of free trade and global markets even relatively small cultural, linguistic or ethnic groups can benefit from forming small and homogeneous political jurisdictions that trade peacefully and are economically integrated with others. This paper provides a formal model of the relationship between openness and the equilibrium number and size of countries, and successfully tests two implications of the model. The first one is that the economic benefits of country size depend on and are mediated by the degree of openness to trade. The second is that the history of Nation-State creations and secessions is influenced by the trade regime.
Physical Description:	42 S. graph. Darst.