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Federalism, separatism and international trade

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  • Daumal, Marie

Abstract

This paper explores whether countries that have a federal Constitution engage in more international trade. We identify two possible mechanisms through which political fragmentation of nation-states, namely federalism, might impact positively on trade globalization processes: domestic market fragmentation and the free trade strategy pursued by certain separatist regions in federal countries. We use a gravity equation running panel regressions to estimate the impact of federalism on trade. The Poisson estimator proposed by Santos Silva and Tenreyro (2006) is used to handle the null trade flows. We test our predictions on a large data set of 148 countries on the 1980-2002 period. After controlling for determinants of trade potentially correlated with federalism, a federalist system is found to increase international trade. We also find that separatism and linguistic fractionalization impact positively on trade openness.

Suggested Citation

  • Daumal, Marie, 2008. "Federalism, separatism and international trade," European Journal of Political Economy, Elsevier, vol. 24(3), pages 675-687, September.
    • Handle: RePEc:eee:poleco:v:24:y:2008:i:3:p:675-687
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    References listed on IDEAS

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    2. Lucie COUFALOVA, 2018. "Scottish Independence: How Would It Affect The Country'S Foreign Trade?," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(2), pages 111-120, July.

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