The Stability and Breakup of Nations: A Quantitative Analysis

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.

Does trust promote growth?

“…We expect that more distant populations that experience less mixing are likely to trust each other less due to a lack of knowledge (i.e., the correlation between F ST distance and generalized trust is expected to be negative). Note that Desmet et al (2011) show that genetic distance data are well correlated with cultural heterogeneity. More specifically, we use the weighted F ST distance, which represents the expected genetic distance between two randomly selected individuals, with one from each country.…”

How Deep Are the Roots of Economic Development?

“…36 Desmet et al (2011) Wacziarg's (2009, 2012a) interpretation of genetic distance, not as a purely genetic measure capturing exclusively biological effects and mechanisms, but as a broad genealogical measure of historical links between populations, capturing the intergenerational transmission of traits along the three dimensions, including the cultural channel and the geneculture interaction channel (Quadrant IV, V, VI).…”

Diversity and Conflict

“…In addition, a larger population may imply a larger recruitment pool for rebels (Fearon and Laitin, 2003), and to the extent that it is associated with greater intrapopulation heterogeneity, a larger population could also be associated with stronger motives for secessionist conflicts (Collier and Hoeffler, 1998;Alesina and Spolaore, 2003;Desmet et al, 2011). Our regression in Column 8 therefore additionally includes the temporal mean of annual population size over our sample period as a covariate.…”