Nation Formation and Genetic Diversity

Abstract

This paper presents a model of nation formation in which culturally heterogeneous agents vote on the optimal level of public spending. Larger nations benefit from increasing returns in the provision of public goods, but bear the costs of greater cultural heterogeneity. This tradeoff induces agents? preferences over different geographical configurations, thus determining the likelihood of secession and unification. We provide empirical support for choosing genetic distances as a proxy of cultural heterogeneity. By using data on genetic distances, we examine the stability of the current map of Europe and identify the regions prone to secession and the countries that are more likely to merge. Our framework is further applied to estimate the welfare gains from European Union membership. Abstract This paper presents a model of nation formation in which culturally heterogeneous agents vote on the optimal level of public spending. Larger nations beneÞt from increasing returns in the provision of public goods, but bear the costs of greater cultural heterogeneity. This tradeoff induces agents' preferences over different geographical conÞgurations, thus determining the likelihood of secession and uniÞcation. We provide empirical support for choosing genetic distances as a proxy of cultural heterogeneity. By using data on genetic distances, we examine the stability of the current map of Europe and identify the regions prone to secession and the countries that are more likely to merge. Our framework is further applied to estimate the welfare gains from European Union membership. JEL ClassiÞcation Codes: H77, D70, F02, H40.

Familiarity Breeds Investment: Diaspora Networks and International Investment

“…Based on the work of Cavalli-Sforza, Menozzi, and Piazza (1994), scholars have developed measures of genetic distances between indigenous populations based on genetic or DNA polymorphism. 18 This measure of genetic distance has been used to proxy for culture in studies of international trade and FDI (Giuliano, Spilimbergo, and Tonon 2006;Guiso, Sapienza, and Zingales 2005), economic development (Spolaore and Wacziarg 2008), and state formation in Europe (Desmet et al 2007). Desmet et al provide evidence that European countries that are genetically alike have populations that provide similar answers to World Values Survey questions about cultural, religious, and moral issues.…”

The “Out of Africa” Hypothesis, Human Genetic Diversity, and Comparative Economic Development

“… 9 See also Desmet et al (2006) who demonstrate a strong correlation between genetic and cultural distances among European populations to argue that genetic distance can be employed as an appropriate proxy to study the effect of cultural distance on the formation of new political borders in Europe. In addition, Guiso et al (2009), employ data on genetic distance between European populations as an instrument for measures of trust to estimate its effect on the volume of bilateral trade and foreign direct investment.…”

Fiscal Equalization and Political Conflict

“…We have thus outlined two operating forces in opposite directions which would de…ne the optimal size of the jurisdiction in a similar fashion as in the generalized version of the Oates theorem of decentralization (1972) 17 . We should explore further this argument using a theoretical framework as in Desmet et al (2006).…”

“…Furthermore, it is in the general interest that the equalization device should be the result of the consensus of all the parts involved since a situation perceived as unfair by any of them could lead to political con ‡ict and instability. 4 The objective of this paper is to analyse the political viability of equalization rules using a model of con ‡ict in the spirit of Ray (2009), which o¤ers a generalization of the particular case of con ‡ict games developed in Esteban and Ray (1999) and explored in detail by Esteban and Ray (2008). Thus, we analyze the circumstances under which one region would be inclined to initiate political con ‡ict when equalization rules are perceived as unfair.…”