Chu, Angus C. (2008): Nation States vs. United Empire: Effects of Political Competition on Economic Growth.
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Is political fragmentation (i.e. nation states) more favorable to economic growth than political unification (i.e. a united empire)? This paper develops a simple endogenous-growth model to analyze the conditions under which economic growth is higher under political fragmentation than under political unification. Under political unification, the economy is vulnerable to excessive Leviathan taxation and possibly subject to the costs of unifying heterogeneous populations. Under political fragmentation, the competing rulers are constrained in taxation but spend excessively on military defense. If and only if capital is sufficiently mobile, then political fragmentation would favor economic growth. When the political regime is chosen by the rulers, they do not always choose the growth-maximizing regime. In particular, there exists a range of parameter values, in which political fragmentation is more favorable to growth but the rulers prefer political unification.
|Item Type:||MPRA Paper|
|Original Title:||Nation States vs. United Empire: Effects of Political Competition on Economic Growth|
|Keywords:||economic growth; Leviathan taxation; interstate competition; political fragmentation|
|Subjects:||H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H20 - General
O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O43 - Institutions and Growth
H - Public Economics > H5 - National Government Expenditures and Related Policies > H56 - National Security and War
|Depositing User:||Angus C. Chu|
|Date Deposited:||12. Dec 2008 16:49|
|Last Modified:||13. Feb 2013 01:26|
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Nation States vs. United Empire: Effects of Political Competition on Economic Growth. (deposited 18. Apr 2008 14:41)
Nation States vs. United Empire: Effects of Political Competition on Economic Growth. (deposited 28. Apr 2008 07:14)
- Nation States vs. United Empire: Effects of Political Competition on Economic Growth. (deposited 12. Dec 2008 16:49) [Currently Displayed]
- Nation States vs. United Empire: Effects of Political Competition on Economic Growth. (deposited 28. Apr 2008 07:14)