Economic Integration and Political Disintegration
American Economic Review
no. 5, December 2000
In a world of trade restrictions, large countries enjoy economic benefits, because political boundaries determine the size of the market. Under free trade and global markets even relatively small cultural, linguistic or ethnic groups can benefit from forming small, homogeneous political jurisdictions. 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. Firstly, the economic benefits of country size are mediated by the degree of openness to trade. Secondly, the history of nation-state creations and secessions is influenced by the trade regime.
Alesina, Alberto, Enrico Spolaore, and Romain Wacziarg.
"Economic Integration and Political Disintegration."
American Economic Review,
Open Economy Macroeconomics
International Economic Order
Economic History: Government, War, Law, and Regulation: General, International, or Comparative