The economic effects of political disintegration: Lessons from Serbia and Montenegro

Abstract

Is there an economic premium from state independence? We shed light on this question by analysing the unique historical case of the peaceful separation of Serbia and Montenegro in 2006-the last fully recognised internationally state-disintegration on European soil. Using the synthetic control approach, we find that independence for the seceding country (Montenegro) had a sizeable but transitory positive effect, boosting GDP per capita in the period immediately following independence, but with gains slowly evaporating in the longer periodwhich we attribute to increased vulnerability of the newly independent state to fluctuations in the international economic environment. In contrast, for Serbia, we find no evidence of an independence dividend. While these results are context-specific, the resemblance of Serbia and Montenegro's case with the contemporaneous independence movements in Europe, namely in the realm of policy autonomy pre-separation, provide insights on possible economic outcomes of secessions on the national and supra-national level in Europe.

The effect of EU membership on tourism in Croatia

“…Intuitively, this method constructs a counterfactual, synthetic outcome for the treated unit in the absence of the treatment, using a linear combination of outcomes from a set of donors, with weights estimated from a pre-selected set of covariates which match, in the pre-treatment period, the outcomes observed for the treated unit. This empirical part, aside from the computational method proposed in Abadie and Gardeazabal (2003), will also include the use of more recent algorithms to construct weights that define the synthetic unit (see Klößner, 2017, 2018), as well as the donor dependence exercise, as suggested in Campos et al (2019) and implemented in Monastiriotis and Zilic (2020). For the baseline estimation, an augmented version of the SCM proposed by Ben-Michael et al ( 2021) is used.…”

Does proximity to conflict affect tourism: Evidence from NATO bombing

“…This is achieved using a set of predictors, same as in the DD estimation, of tourism sector outcomes in the years before the treatment. Other examples of the application of the method can be seen in [ 33 – 36 ].…”

How Does Deglobalization Affect Economic Growth?

“…Moreover, some studies find a positive relationship between political globalization and economic growth (Chang and Lee, 2010;Olimpia and Stela, 2017;Gygli et al, 2019;Hasan, 2019;Nguyen and Le, 2021), while others show that political globalization hinders economic growth (Kilicarslan and Dumrul, 2018;Bataka, 2019). Finally, Monastiriotis and Zilic (2020) show that political disintegration has no effect on economic growth in Serbia but has a positive effect in Montenegro. Waters et al (1994) state that globalization is the disappearance of geographic boundaries in social and cultural life.…”