Globalization and political structure

Citació

  • Gancia G, Ponzetto GAM, Ventura J. Globalization and political structure. Journal of the European Economic Association. 2022 Jun;20(3):1276-310. DOI: 10.1093/jeea/jvac019

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Descripció

  • Resum

    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.
  • Descripció

    Supplemental material files: online appendix; replication files
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