Why Are Rich Countries More Politically Cohesive?

• We document empirically that rich countries are more politically cohesive than poorer countries. In order to explain this regularity, we provide a model where political cohesion is linked to the emergence of a fully functioning market economy. Without market exchange, the welfare of inherently selfish individuals will be mutually independent. Whoever has greater bargaining power will be willing to make decisions that enhance the productivity of their supporters at the expense of other groups in society. If the gains from specialization are sufficiently large, however, a market economy will emerge. From being essentially non-cohesive under self-sufficiency, the political decision-making process becomes cohesive in the market economy, because the welfare of individuals will be mutually interdependent as a result of the exchange of goods.

Subject headings

SAMHÄLLSVETENSKAP  -- Ekonomi och näringsliv (hsv//swe)

SOCIAL SCIENCES  -- Economics and Business (hsv//eng)

Keyword

Economic growth

market exchange

political cohesion

O41

P16

industrious revolution

growth

peace

institutions

instability

inequality

government

conflict

security

work

vries j

1994

journal of economic history

v54

p249

Publication and Content Type

ref (subject category)

art (subject category)