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Globalization and Political Structure

Gino Gancia (), Giacomo Ponzetto () and Jaume Ventura

No 11159, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The first wave of globalization (1830-1914) was accompanied by a decline in the number of countries from 125 to 54. The second wave of globalization (1950-present) has led instead to an increase in the number of countries to a record high of more than 190. This paper develops a theoretical framework to study the interaction between globalization and political structure. We show that political structure adapts to expanding trade opportunities in a non-monotonic way. Borders hamper trade. In its early stages, the political response to globalization consists of removing borders by increasing country size. In its later stages, however, the political response to globalization is to remove the cost of borders by creating international economic unions, and this leads to a reduction in country size.

Keywords: Globalization; international unions; political structure; size of countries (search for similar items in EconPapers)
JEL-codes: D71 F15 F55 H77 O57 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int and nep-pol
Date: 2016-03
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Working Paper: Globalization and political structure (2018) Downloads
Working Paper: Globalization and political structure (2017) Downloads
Working Paper: Globalization and Political Structure (2016) Downloads
Working Paper: Globalization and Political Structure (2016) Downloads
Working Paper: Globalization and Political Structure (2014) Downloads
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