Summary The economics of secession a review sjes.springeropen.com
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The text discusses the complex factors involved in secession, including the trade-offs between economies of scale and diversity, the role of fiscal decentralization, and the international balance between self-determination and territorial integrity.
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Key Points
- Secession results from a trade-off between the benefits of being part of a large country and the costs associated with greater heterogeneity
- International law does not grant a general right to secede, but recognizes the right to self-determination in cases of decolonization and for groups discriminated against on the basis of ethnic minority status
- Two main conditions seem necessary for international recognition of a secession: a negotiation with the central state and a ratification of the declaration of independence through a binding referendum
- Decentralization can be effective to accommodate secessionist conflicts, but may also provide secessionist regions with additional resources, increasing the odds of successful separation
- Economists predict secessions when economies of scale are low and population heterogeneity is high, with richer regions more likely to secede, though the desire for self-rule has intrinsic value beyond narrow economic factors
Summaries
24 word summary
Secession involves balancing benefits of scale and costs of heterogeneity. Fiscal decentralization can enable or deter secession. International stance balances self-determination and territorial integrity.
49 word summary
Secession involves a trade-off between benefits of a large country and costs of heterogeneity. Economies of scale and market size are centripetal forces, while population heterogeneity is a centrifugal force. Fiscal decentralization can both facilitate and deter secession. The international community's stance on secession balances self-determination and territorial integrity.
122 word summary
The paper examines the economic aspects of secession, noting the interplay between centripetal and centrifugal forces. While international law does not grant a general right to secede, various secession modalities can lead to recognition. The economic theory suggests secession results from a trade-off between the benefits of a large country and the costs of heterogeneity. Empirical evidence confirms these trade-offs, with decentralization potentially accommodating secessionist conflicts under certain conditions. The literature highlights economies of scale and market size as centripetal forces, while population heterogeneity is a key centrifugal force. Fiscal decentralization can both facilitate and deter secession. Overall, the desire for self-rule has intrinsic value beyond narrow economics, and the international community's stance on secession remains complex, balancing self-determination and territorial integrity.
363 word summary
The paper provides a comprehensive review of the economic aspects of secession, highlighting the complex interplay between centripetal and centrifugal forces. It notes that international law does not grant a general right to secede, but there are various modalities of secession that can lead to international recognition.
The economic theory suggests that the decision to secede results from a trade-off between the benefits of being part of a large country and the costs associated with greater heterogeneity. Regions that are geographically and culturally distant from the center may not receive sufficient public goods or have sharply distinct preferences, leading to non-economic benefits of secession.
Empirical evidence confirms the importance of these trade-offs, showing that decentralization may only accommodate secessionist conflicts if certain conditions are met. However, decentralization is often used by central governments to appease separatists, leading to a positive relationship between centrifugal forces and decentralization.
The paper discusses the secession phenomenon from the perspective of international and EU law, noting that the right to self-determination is recognized in cases of decolonization and for groups facing discrimination, but with limits to avoid an avalanche of secession claims. Regarding the EU, the treaties do not explicitly mention internal secession, and the process for a new independent state to join the EU remains unclear.
The economics of secession literature highlights two main centripetal forces favoring centralization: economies of scale in public good provision and the size of the national market. In contrast, the primary centrifugal force pushing towards secession is the heterogeneity of the population. Empirical evidence supports these theoretical predictions, with larger, richer, and more culturally distinct regions more likely to exhibit secessionist tendencies.
The literature also explores the links between fiscal decentralization and secession, with decentralization potentially providing secessionist regions with additional resources and increasing the odds of successful separation, but also potentially preserving territorial integrity by better matching preferences and reducing the costs of heterogeneity.
Overall, the economics of secession highlights the complex balance between the benefits of scale and the costs of heterogeneity, with the desire for self-rule having intrinsic value beyond narrow economic factors. The international community's stance on secession remains complex, with self-determination and territorial integrity often in conflict.
532 word summary
The paper provides a comprehensive review of the legal, theoretical, and empirical aspects of secessions from an economic perspective. It highlights that international law does not grant a general right to secede, but there are several modalities of secessions that are important for new states seeking international recognition.
The economic theory shows that the decision for a region to secede results from a trade-off between the benefits of being part of a large country and the costs associated with greater heterogeneity. Regions that are geographically and culturally distant from the center may not receive much public goods and/or have sharply distinct preferences, leading to non-economic benefits of secession.
Empirical evidence confirms the importance of these trade-offs and shows that decentralization may be effective to accommodate secessionist conflicts only if certain conditions are fulfilled. However, decentralization is often used by central governments to appease separatists, leading to a positive relationship between centrifugal forces and decentralization.
The paper discusses the secession phenomenon from the perspective of international and EU law. It notes that international law recognizes the right to self-determination in cases of decolonization and for groups discriminated against on the basis of ethnic minority status, but sets limits to avoid an avalanche of secession claims. Regarding the EU law, the European treaties do not explicitly mention internal secession, and it is unclear whether a new independent state would follow a fast or long track process to join the EU.
The paper highlights that two main conditions seem necessary for international recognition of a secession: a negotiation with the central state and a ratification of the declaration of independence through a binding referendum. The case of Catalonia, where no such negotiation or binding referendum took place, contrasts with the case of Scotland, where a binding referendum was held.
The economics of secession literature highlights two main centripetal forces that favor centralization: economies of scale in public good provision and the size of the national market. In contrast, the primary centrifugal force pushing towards secession is the heterogeneity of the population. In non-democratic settings, the threat of secession acts as a constraint on the government's power to tax, while in democratic settings, the trade-off is similar, with the centripetal forces favoring centralization and the centrifugal forces pushing towards secession.
Empirical evidence broadly supports the theoretical predictions, with larger, richer, and more culturally distinct regions more likely to exhibit secessionist tendencies. Regions with natural resources and a history of autonomy or indirect rule are also more prone to demand self-determination.
The literature also explores the links between fiscal decentralization and secession, with decentralization potentially providing secessionist regions with additional resources and increasing the odds of successful separation. However, decentralization can also be a way to preserve territorial integrity by better matching preferences and reducing the costs of heterogeneity.
Overall, the economics of secession highlights the complex interplay between centripetal and centrifugal forces, with the optimal size of countries and the likelihood of secession depending on the balance between the benefits of scale and the costs of heterogeneity. The desire for self-rule also has intrinsic value beyond narrow economic factors, and the international community's stance on secession remains complex, with self-determination and territorial integrity often in conflict.
1224 word summary
The paper presents a review of the legal, theoretical, and empirical aspects of secessions from an economic perspective. It highlights that international law does not grant a general right to secede, nor does it forbid secession, and there are several modalities of secessions that are important for new states seeking international recognition.
The economic theory shows that the decision for a region to remain in a country or to secede results from a trade-off between the benefits of being part of a large country and the costs associated with greater heterogeneity. Regions that are geographically and culturally distant from the center may not receive much public goods and/or have sharply distinct preferences, leading to non-economic benefits of secession.
Empirical evidence confirms the importance of these trade-offs and shows that decentralization may be effective to accommodate secessionist conflicts only if certain conditions are fulfilled. However, decentralization is often used by central governments to appease separatists, leading to a positive relationship between centrifugal forces and decentralization. Additionally, subnational groups granted greater autonomy may use the available resources to foster separatist tendencies, and decentralization may be interpreted differently by central and subnational governments.
The paper also discusses the secession phenomenon from the perspective of international and EU law. It notes that international law recognizes the right to self-determination in cases of decolonization and for groups discriminated against on the basis of ethnic minority status, but sets limits to avoid an avalanche of secession claims, such as the principle of respect for the state's territorial integrity.
Regarding the EU law, the European treaties do not explicitly mention internal secession, as there was no precedent or immediate risk when they were drafted. However, the Maastricht treaty, as modified by the Lisbon treaty, states that the Union shall respect the national identities and territorial integrity of member states. It is unclear whether a new independent state would follow a fast or long track process to join the EU, but pro-independence leaders have publicly considered EU membership as self-evident.
The paper highlights that two main conditions seem necessary for international recognition of a secession: a negotiation with the central state and a ratification of the declaration of independence through a binding referendum. The case of Catalonia, where no such negotiation or binding referendum took place, contrasts with the case of Scotland, where a binding referendum was held, even though the "No" vote prevailed.
In conclusion, the paper provides a comprehensive review of the legal, theoretical, and empirical aspects of secessions, highlighting the complex trade-offs and the importance of the modalities of secession for international recognition.
The economics of secession has been a topic of extensive research, with scholars exploring the key drivers and trade-offs involved in the decision to secede. The literature highlights two main centripetal forces that favor centralization: economies of scale in public good provision and the size of the national market. In contrast, the primary centrifugal force pushing towards secession is the heterogeneity of the population.
In non-democratic settings, the government, represented as an elite or sharing coalition, sets tax rates to extract revenue from the population. The threat of secession acts as a constraint on the government's power to tax, leading to an "accommodating" tax policy. Secession, however, is never observed in equilibrium as the threat alone modifies the government's behavior.
In democratic settings, political borders and economic policy outcomes are determined through majority voting. The trade-off is similar, with the centripetal forces favoring centralization and the centrifugal forces pushing towards secession. Alesina and Spolaore (1997) show that the democratic equilibrium leads to excessive political fragmentation, as individuals located far from the public good provision bear the same costs as those closer, but derive less utility. Bolton and Roland (1997) emphasize the role of income inequality across regions, with both richer and poorer regions potentially supporting secession for opposite reasons.
Several extensions have been proposed to make the theory more realistic. Globalization and economic integration are found to favor secession, as the size of political jurisdictions no longer needs to coincide with the size of their market. Interjurisdictional spillovers and free-riding behavior also push smaller regions towards secession. Strategic voting and delegation can lead to inefficient outcomes, potentially making secession more attractive for minority regions.
The literature also explores the links between fiscal decentralization and secession. Decentralization can be seen as a way to preserve territorial integrity by better matching preferences and reducing the costs of heterogeneity. However, it may also provide secessionist regions with additional resources, increasing the odds of successful separation.
Empirical evidence broadly supports the theoretical predictions. Larger, richer, and more culturally distinct regions are more likely to exhibit secessionist tendencies. Regions with natural resources and a history of autonomy or indirect rule are also more prone to demand self-determination. The trade-off between economies of scale and cultural heterogeneity appears to be a key determinant of secession, with regions that are most likely to secede being those where the costs of heterogeneity outweigh the benefits of scale.
Overall, the economics of secession highlights the complex interplay between centripetal and centrifugal forces, with the optimal size of countries and the likelihood of secession depending on the balance between the benefits of scale and the costs of heterogeneity. The literature provides valuable insights into the drivers of secessionist movements and the potential policy responses, such as fiscal decentralization, that can help preserve the territorial integrity of countries.
Economists predict secessions when economies of scale are relatively unimportant and the cost of population heterogeneity is high. Small economies of scale mean newly formed countries will not suffer much from their smaller size when providing public goods. High costs of population heterogeneity mean newly independent countries will benefit from greater social cohesion. Secessionist claims are more likely from richer-than-average regions, which subsidize the rest of the country.
The desire for self-rule cannot be explained solely by economic factors. Individuals in newly independent countries bear a large economic penalty, equivalent to about 20% of GDP per capita. Economic differences alone likely would not have sufficed for Yugoslavia's disintegration, suggesting self-rule offers intrinsic value, especially for culturally distinct groups.
Legally, international law promotes two contradictory rights - self-determination and territorial integrity. The international community has accepted separations in some cases, such as decolonization and East Timor, Bougainville, or South Sudan. A history of discrimination and free referendums seem necessary, though not sufficient, for recognition of new states. Within the EU, no formal stance exists on secession, so outcomes will depend on political decisions by member states.
Large, diverse, and regionally unequal countries are likely to decentralize to contain secessionist demands. Studies show federal and decentralized arrangements can successfully contain centrifugal forces, if regional borders do not closely coincide with ethnic groups and power is sufficiently devolved. Fiscal decentralization and regional autonomy are associated with fewer ethnic conflicts, especially in democratic and rich countries. Effectiveness in poor or fragile countries remains uncertain.
In summary, economists predict secessions when economies of scale are low and population heterogeneity is high, with richer regions more likely to secede. However, the desire for self-rule has intrinsic value beyond narrow economic factors. Legally, self-determination and territorial integrity conflict, with the international community accepting some separations. Decentralization can contain secessionist demands if implemented properly, but effectiveness varies across contexts. Overall, the patterns of secessionist demands align with economic reasoning, though self-rule motivations extend beyond just economic considerations.