Working Paper: NBER ID: w5694
Authors: Alberto Alesina; Enrico Spolaore
Abstract: This paper provides a formal model of endogenous country formation and of choice of defense spending in a world with international conflict. The model is consistent with three observations. First, secessions and, more generally, break-up of countries should follow a reduction in the likelihood of international conflict. Second, the number of regional conflicts between smaller countries may increase as a result of the break-up of larger countries. Third, the size of the peace divided -- i.e., the reduction in the defense spending in a more peaceful world -- is limited by the process of country break-up.
Keywords: international conflict; defense spending; country size
JEL Codes: F51; H56
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| A reduction in the likelihood of international conflict (F51) | An increase in the number of countries (F69) |
| The breakup of larger countries (F36) | An increase in the number of regional conflicts between smaller countries (F51) |
| A reduction in military spending following the end of the Cold War (H56) | Limited reduction in military spending due to increased per capita costs of defense in smaller countries (H56) |