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The stability and breakup of nations: a quantitative analysis

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Abstract

This paper quantitatively analyzes the stability and breakup of nations. The tradeoff between increasing returns in the provision of public goods and the costs of greater cultural heterogeneity mediates agents’ preferences over different geographical configurations, thus determining the likelihood of secessions and unions. After calibrating the model to Europe, we identify the regions prone to secession and the countries most likely to merge. We then estimate the implied monetary gains from EU membership. As a test of the theory, we show that the model can account for the breakup of Yugoslavia and the dynamics of its disintegration. We find that economic differences between the Yugoslav republics determined the order of disintegration, but cultural differences, though small, were key to the country’s instability. The paper also provides empirical support for the use of genetic distances as a proxy for cultural heterogeneity.

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Authors and Affiliations

  1. Universidad Carlos III, Getafe, Madrid, Spain

    Klaus Desmet & Ignacio Ortuño-Ortín

  2. CEPR, London, UK

    Klaus Desmet & Shlomo Weber

  3. Toulouse School of Economics, Toulouse, France

    Michel Le Breton

  4. Southern Methodist University, Dallas, TX, USA

    Shlomo Weber

  5. New Economic School, Moscow, Russia

    Shlomo Weber

Authors
  1. Klaus Desmet
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  2. Michel Le Breton
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  3. Ignacio Ortuño-Ortín
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  4. Shlomo Weber
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Correspondence to Shlomo Weber.

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Desmet, K., Le Breton, M., Ortuño-Ortín, I. et al. The stability and breakup of nations: a quantitative analysis. J Econ Growth 16, 183–213 (2011). https://doi.org/10.1007/s10887-011-9068-z

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  • DOI: https://doi.org/10.1007/s10887-011-9068-z

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