Working Paper: NBER ID: w9223
Authors: Enrico Spolaore; Romain Wacziarg
Abstract: This paper presents a framework to understand and measure the effects of political borders on economic growth and per capita income levels. We present a model providing a theoretical foundation to estimate empirically the effects of political borders on growth. In our model, political integration between two countries results in a positive country size effect and a negative effect through reduced openness vis-…-vis the rest of the world. We estimate the growth effects that would have resulted from the hypothetical removal of national borders between pairs of adjacent countries. We also identify country pairs where political integration would have been mutually beneficial.
Keywords: No keywords provided
JEL Codes: F1; O5
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Political integration between two countries (F55) | Positive country size effect (O57) |
| Political integration between two countries (F55) | Negative effect due to reduced openness to trade (F69) |
| Removal of borders (F55) | Increased economic activity and efficiency (O49) |
| Removal of borders (F55) | Enhanced growth rates in integrated countries (O57) |
| Political integration could shield fast-growing countries from slow-growing neighbors (F15) | Net effect of integration on growth depends on specific characteristics of the countries involved (F15) |