Ventura 2018a - Revision history

Scipediacontent at 08:53, 9 July 2018

2018-07-09T08:53:11Z

Scipediacontent at 08:52, 9 July 2018

2018-07-09T08:52:56Z

Scipediacontent at 08:52, 9 July 2018

2018-07-09T08:52:35Z

Scipediacontent at 10:15, 20 June 2018

2018-06-20T10:15:29Z

Scipediacontent at 10:14, 20 June 2018

2018-06-20T10:14:11Z

Danielquer: Danielquer moved page Draft Domingo 538881869 to Ventura 2018a

2018-05-11T10:59:44Z

Danielquer moved page Draft Domingo 538881869 to Ventura 2018a

Scipedia at 13:45, 5 March 2018

2018-03-05T13:45:32Z

Scipedia at 13:45, 5 March 2018

2018-03-05T13:45:13Z

Danieldomingo: Created page with " == Abstract == The …rst wave of globalization (1830-1914) witnessed a decline in the number of countries from 125 to 54. Political consolidation was often achieved through..."

2018-03-04T19:29:03Z

Created page with " == Abstract == The …rst wave of globalization (1830-1914) witnessed a decline in the number of countries from 125 to 54. Political consolidation was often achieved through..."

New page

== Abstract ==

The …rst wave of globalization (1830-1914) witnessed a decline in the number of countries from 125 to 54. Political consolidation was often achieved through war and conquest. 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. Political fragmentation has been accompanied by the creation of peaceful structures of supranational governance. This paper develops a theoretical model of the interaction between globalization and political structure that accounts for these trends and their reversal. We show that political structure adapts to steadily 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. War is then an appealing way of conquering markets. In its later stages, however, the political response to globalization is to remove the cost of borders by creating international economic unions. As a result, country size declines and negotiation replaces war as a tool to ensure market access. JEL Classi…cation:D71, F15, F55, H77, O57

== Full document ==
<pdf>Media:draft_Domingo_538881869-document.pdf</pdf>

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−	<span style="text-align: center; font-size: 75%;"><span id="fn-2"></span>([[#fnc-2\|<sup>2</sup>]]) Unlike us, Alesina, Spolaore and Wacziarg (2000) find that globalization always reduces country size. Their analysis differs in two crucial ways. First, they assumed that economies of scope are so large that the world union is never an option. Second, they modelled globalization as a reduction in the border effect and not in transportation costs. In our model, the border effect is removed endogenously by the creation of the union.</span>	+	<span style="text-align: center; font-size: 75%;"><span id="fn-1"></span>([[#fnc-1\|<sup>1</sup>]]) Unlike us, Alesina, Spolaore and Wacziarg (2000) find that globalization always reduces country size. Their analysis differs in two crucial ways. First, they assumed that economies of scope are so large that the world union is never an option. Second, they modelled globalization as a reduction in the border effect and not in transportation costs. In our model, the border effect is removed endogenously by the creation of the union.</span>

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 This distinction expands the set of possible political structures. We can think of countries as sets of localities sharing economic regulations and public services; and economic unions as sets of countries sharing economic regulations, but not public services. The non-monotonic effect of globalization on political structure follows from the presence of economies of scope: coordinating different levels of government is costly and, as a result, having both countries and unions is more expensive than a single-level structure in which countries provide both public services and economic regulations.
-At early stages of globalization, the gains from trade are small and the benefit of creating an economic union does not justify the loss of economies of scope. Thus, a single-level governance structure is optimal. As globalization proceeds, localities remove borders by increasing the size of countries. The number of countries declines and the mismatch between each locality's ideal and actual provision of public services grows. Eventually, this mismatch is large enough to justify a move to a two-level governance structure. The world political structure shifts from a few large countries to many small countries within a world economic union. The two-level structure is more expensive, but it is nonetheless desirable because it facilitates trade and improves preference-matching in the provision of public services. These predictions are consistent with the seemingly opposite reactions of the world political structure to the first and second waves of globalization. <span id="fnc-2"></span><span style="text-align: center; font-size: 75%;">[[#fn-1|<sup>1</sup>]]</span>
+At early stages of globalization, the gains from trade are small and the benefit of creating an economic union does not justify the loss of economies of scope. Thus, a single-level governance structure is optimal. As globalization proceeds, localities remove borders by increasing the size of countries. The number of countries declines and the mismatch between each locality's ideal and actual provision of public services grows. Eventually, this mismatch is large enough to justify a move to a two-level governance structure. The world political structure shifts from a few large countries to many small countries within a world economic union. The two-level structure is more expensive, but it is nonetheless desirable because it facilitates trade and improves preference-matching in the provision of public services. These predictions are consistent with the seemingly opposite reactions of the world political structure to the first and second waves of globalization. <span id="fnc-1"></span><span style="text-align: center; font-size: 75%;">[[#fn-1|<sup>1</sup>]]</span>
 ==War versus Diplomacy==

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 This distinction expands the set of possible political structures. We can think of countries as sets of localities sharing economic regulations and public services; and economic unions as sets of countries sharing economic regulations, but not public services. The non-monotonic effect of globalization on political structure follows from the presence of economies of scope: coordinating different levels of government is costly and, as a result, having both countries and unions is more expensive than a single-level structure in which countries provide both public services and economic regulations.
-At early stages of globalization, the gains from trade are small and the benefit of creating an economic union does not justify the loss of economies of scope. Thus, a single-level governance structure is optimal. As globalization proceeds, localities remove borders by increasing the size of countries. The number of countries declines and the mismatch between each locality's ideal and actual provision of public services grows. Eventually, this mismatch is large enough to justify a move to a two-level governance structure. The world political structure shifts from a few large countries to many small countries within a world economic union. The two-level structure is more expensive, but it is nonetheless desirable because it facilitates trade and improves preference-matching in the provision of public services. These predictions are consistent with the seemingly opposite reactions of the world political structure to the first and second waves of globalization. <span id="fnc-2"></span><span style="text-align: center; font-size: 75%;">[[#fn-2|<sup>2</sup>]]</span>
+At early stages of globalization, the gains from trade are small and the benefit of creating an economic union does not justify the loss of economies of scope. Thus, a single-level governance structure is optimal. As globalization proceeds, localities remove borders by increasing the size of countries. The number of countries declines and the mismatch between each locality's ideal and actual provision of public services grows. Eventually, this mismatch is large enough to justify a move to a two-level governance structure. The world political structure shifts from a few large countries to many small countries within a world economic union. The two-level structure is more expensive, but it is nonetheless desirable because it facilitates trade and improves preference-matching in the provision of public services. These predictions are consistent with the seemingly opposite reactions of the world political structure to the first and second waves of globalization. <span id="fnc-2"></span><span style="text-align: center; font-size: 75%;">[[#fn-1|<sup>1</sup>]]</span>
 ==War versus Diplomacy==

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 Jaume Ventura
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 ''The number of countries declined from 125 to 54 during the first wave of globalization (1830-1914) while it rose above 190 during the second (1950-present). Moreover, border changes have been much more peaceful during the second wave of globalization. These observations are consistent with a theory in which political structure adapts to expanding trade opportunities. Globalization makes border costly. In early stages, borders are removed by increasing country size. In later stages, the cost of borders is removed by creating peaceful economic unions, and this leads to a reduction in country size.''
 In 1820, the world was made up of 125 sovereign states. By the end of the first wave of globalization in 1914, the number of countries had fallen to 54. The interwar period witnessed a reversal of these trends: trade collapsed and the number of sovereign states rose to 76 by 1949. Until then, political and economic integration had proceeded together. Yet, the end of World War II marks the beginning of a new era. The second wave of globalization that started after 1950 has led trade to flourish to levels never seen before. But this time the process of economic integration was accompanied by different changes in the world political structure. On the one hand, the number of countries has risen to a record high of more than 190. On the other hand, there has been a proliferation and growth of international treaties aimed at fostering economic integration, such as the WTO and the EU. These trends are illustrated in Figure 1.

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-The first wave of globalization (1830-1914) witnessed a decline in the number of countries from 125 to 54. Political consolidation was often achieved through war and conquest. 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. Political fragmentation has been accompanied by the creation of peaceful structures of supranational governance. This paper develops a theoretical model of the interaction between globalization and political structure that accounts for these trends and their reversal. We show that political structure adapts to steadily 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. War is then an appealing way of conquering markets. In its later stages, however, the political response to globalization is to remove the cost of borders by creating international economic unions. As a result, country size declines and negotiation replaces war as a tool to ensure market access.
+==GLOBALIZATION AND POLITICAL STRUCTURE==
-== Full document ==
+Jaume Ventura
-<pdf>Media:draft_Domingo_538881869-document.pdf</pdf>
+-->

← Older revision	Revision as of 10:59, 11 May 2018
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 == Abstract ==
-The …rst wave of globalization (1830-1914) witnessed a decline in the number of countries from 125 to 54. Political consolidation was often achieved through war and conquest. 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. Political fragmentation has been accompanied by the creation of peaceful structures of supranational governance. This paper develops a theoretical model of the interaction between globalization and political structure that accounts for these trends and their reversal. We show that political structure adapts to steadily 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. War is then an appealing way of conquering markets. In its later stages, however, the political response to globalization is to remove the cost of borders by creating international economic unions. As a result, country size declines and negotiation replaces war as a tool to ensure market access. JEL Classi…cation:D71, F15, F55, H77, O57
+The first wave of globalization (1830-1914) witnessed a decline in the number of countries from 125 to 54. Political consolidation was often achieved through war and conquest. 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. Political fragmentation has been accompanied by the creation of peaceful structures of supranational governance. This paper develops a theoretical model of the interaction between globalization and political structure that accounts for these trends and their reversal. We show that political structure adapts to steadily 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. War is then an appealing way of conquering markets. In its later stages, however, the political response to globalization is to remove the cost of borders by creating international economic unions. As a result, country size declines and negotiation replaces war as a tool to ensure market access. JEL Classi…cation:D71, F15, F55, H77, O57
 == Full document ==
 <pdf>Media:draft_Domingo_538881869-document.pdf</pdf>