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Trade, Growth and the Size of Countries

Alberto Alesina, Enrico Spolaore () and Romain Wacziarg ()

Chapter 23 in Handbook of Economic Growth, 2005, vol. 1, Part B, pp 1499-1542 from Elsevier

Abstract: Normally, economists take the size of countries as an exogenous variable. Nevertheless, the borders of countries and their size change, partially in response to economic factors such as the pattern of international trade. Conversely, the size of countries influences their economic performance and their preferences for international economic policies - for instance smaller countries have a greater stake in maintaining free trade. In this paper, we review the theory and evidence concerning a growing body of research that considers both the impact of market size on growth and the endogenous determination of country size. We argue that our understanding of economic performance and of the history of international economic integration can be greatly improved by bringing the issue of country size at the forefront of the analysis of growth.

JEL-codes: O0 (search for similar items in EconPapers)
Date: 2005
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