The economics of state fragmentation: Assessing the economic impact of secession

Abstract

This paper provides empirical evidence that declaring independence significantly lowers per capita GDP based on a large panel of countries covering the period 1950-2013. To do so, we rely on a semi-parametric identification strategy that controls for the confounding effects of past GDP dynamics, anticipation effects, unobserved heterogeneity, model uncertainty and effect heterogeneity.Our baseline results indicate that declaring independence reduces per capita GDP by around 20% in the long run. We subsequently propose a novel triple-difference procedure to demonstrate the stability of these results. Another methodological novelty consists of the development of a two-step estimator to shed some light on the primary channels driving our results. We find robust evidence that the adverse effects of independence increase in the extent of surface area loss, pointing to the presence of economies of scale, but that they are mitigated when newly independent states liberalize their trade regime or use their new-found political autonomy to democratize.

Sustainable Development Goals in BRICS and G7 countries: Increasing accomplishments through policy synergies in four dimensions

“…Hence the demand for a robust economy through which every other implementation resource may be supported. Although economic growth is still fragmented and heterogeneous (Reynaerts & Vanschoonbeek, 2022)―holding to the earlier proposition of EKCs, it can facilitate policies that boost resilience against the vulnerabilities of climate change (Leichenko & Silva, 2014; Tawiah et al, 2022) but the distribution of such assets must be steered by defined objectives and sector‐specific or hazard‐specific criteria (Füssel, 2010). As noted by Tol (2017) and Nakhooda et al, (2014), disparities among governments' priority between environmental issues and rapid economic growth would make any possibility of expansion of climate policy worthless.…”