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.

Gancia, G., Ponzetto, G., Ventura, J. (2022). Globalization and Political Structure. JOURNAL OF THE EUROPEAN ECONOMIC ASSOCIATION, 20(3), 1276-1310 [10.1093/jeea/jvac019].

Globalization and Political Structure

Gancia, G
;
2022

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.
Articolo in rivista - Articolo scientifico
Globalization, Political Structure
English
10-mag-2022
2022
20
3
1276
1310
open
Gancia, G., Ponzetto, G., Ventura, J. (2022). Globalization and Political Structure. JOURNAL OF THE EUROPEAN ECONOMIC ASSOCIATION, 20(3), 1276-1310 [10.1093/jeea/jvac019].
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10281/396693
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