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Breaking the Unbreakable Union: Nationalism, Trade Disintegration and the Soviet Economic Collapse

Marvin Suesse

No 57, Working Papers from European Historical Economics Society (EHES)

Abstract: The breakup of the Soviet Union provides evidence for the detrimental effects of secessionist conflict on domestic integration and economic growth. This paper shows that the increased likelihood of secessions by the UnionÕs member republics in the late 1980s strongly reduced internal Union trade. Economic disintegration thus proceeded along internal borders and preceded the Soviet UnionÕs official dissolution. This helps to explain the severity of the output fall in the late Soviet period. Methodologically, these results stem from an empirical gravity framework, which is derived from first principles by a game-theoretic modeling of Soviet internal trade. Exogenous variation in nationalist agendas, namely the desire to preserve national languages, is used to preclude endogeneity running from trade patterns to secession.

Keywords: Nationalism; secession; economic disintegration; output fall; Soviet Union; transition economies (search for similar items in EconPapers)
JEL-codes: F52 N14 P20 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2014-07
New Economics Papers: this item is included in nep-cis, nep-int and nep-tra
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