Employing agent-based modelling techniques, the authors examine the evolution of a world with sovereign states that maximize power. They show that: (1) the size (number) of states increases (decreases) as war technologies become capital-intensive; (2) the number of states declines with development and population expansion; (3) capital-rich (capital-poor) economies lead to smaller (larger) economies (mainly because war is less frequent if capital is mobile); (4) world government may become possible in the future (given the evolution of military technology) yet only with a very low probability (given the distribution of economic activities throughout the globe); (5) the possibility of secession leads to a permanent increase in the number of countries if all effects when the countries involved in the split are democratic. These stylized findings fit well the historical evolution of Europe and most of the territorial dynamics of state formation over time, at least until the nineteenth century. The last point accommodates the explosion of the number of countries we have witnessed in the twentieth century.
Variable Cost Capital Mobility Public Good Provision Territorial Size Technological Shock
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We thank Brett Carter and Waqas Jafris for their research assistance.
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