The economic effects of political disintegration: Lessons from Serbia and Montenegro

Vassilis Monastiriotis () and Ivan Zilic ()

No 1903, Working Papers from The Institute of Economics, Zagreb

Abstract: Is there an economic premium from state independence? We shed light on this question by analysing the unique historical case of the peaceful separation of Serbia and Montenegro in 2006-the last fully recognised internationally state-disintegration on European soil. Using the synthetic control approach, we find that independence for the seceding country (Montenegro) had a sizeable but transitory positive effect, boosting GDP per capita in the period immediately following independence, but with gains slowly evaporating in the longer period-which we attribute to increased vulnerability of the newly independent state to fluctuations in the international economic environment. In contrast, for Serbia, we find no evidence of an independence dividend. While these results are context-specific, the resemblance of Serbia and Montenegro’s case with the contemporaneous independence movements in Europe, namely in the realm of policy autonomy pre-separation, provide insights on possible economic outcomes of secessions on the national and supra-national level in Europe.

Keywords: secession; independence; political disintegration; synthetic control; Western Balkans (search for similar items in EconPapers)
JEL-codes: F15 N14 O52 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2019-06
New Economics Papers: this item is included in nep-eec, nep-his and nep-tra
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Related works:
Journal Article: The economic effects of political disintegration: Lessons from Serbia and Montenegro (2020)
Working Paper: The economic effects of political disintegration: lessons from Serbia and Montenegro (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:iez:wpaper:1903

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