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Globalization and Political Structure

16 March 2016 at 12:00 PM - 1:30 PM

Room 104, Campus on Viale Romania, 32

Speaker: Jaume Ventura, CREI

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 borders by creating economic unions, and this leads to a reduction
in country size.