Rise and Fall of Empires in the Industrial Era: A Story of Shifting Comparative Advantages

Roberto Bonfatti and Kerem Cosar

No 17482, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: The last two centuries witnessed the rise and fall of empires. We construct a model which rationalises this in terms of the changing trade gains from empires. In the model, empires are arrangements that reduce trade cost between an industrial metropole and the agricultural periphery. During early industrialisation, the value of such bilateral trade increases, and so does the value of empires. As industrialisation diffuses, and as manufactures become more differentiated, trade becomes more multilateral and intra-industry, reducing the value of empires. Our results are consistent with long-term changes in income distribution and trade patterns, and with previous historical arguments.

Keywords: International trade; Empires; Comparative advantage; Optimal country size (search for similar items in EconPapers)
JEL-codes: F1 F5 N7 (search for similar items in EconPapers)
Date: 2022-07
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Working Paper: Rise and Fall of Empires in the Industrial Era: A Story of Shifting Comparative Advantages (2022)
Working Paper: Rise and fall of empires in the industrial era: A story of shifting comparative advantages (2022)
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