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Unified China and Divided Europe

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  • Ko, Chiu Yu
  • Koyama, Mark
  • Sng, Tuan-Hwee

Abstract

This paper studies the causes and consequences of political centralization and fragmentation in China and Europe. We argue that the severe and unidirectional threat of external invasion fostered political centralization in China while Europe faced a wider variety of moderate external threats and remained politically fragmented. Our model allows us to explore the economic consequences of political centralization and fragmentation. Political centralization in China led to lower taxation and hence faster population growth during peacetime than in Europe. But it also meant that China was relatively fragile in the event of an external invasion. Our results are consistent with historical evidence of violent conflicts, tax levels, and population growth in both China and Europe.

Suggested Citation

  • Ko, Chiu Yu & Koyama, Mark & Sng, Tuan-Hwee, 2014. "Unified China and Divided Europe," CEI Working Paper Series 2014-7, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    • Handle: RePEc:hit:hitcei:2014-7
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    More about this item

    Keywords

    China; Europe; Great Divergence; Political Fragmentation; Political Centralization;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H4 - Public Economics - - Publicly Provided Goods
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • N30 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - General, International, or Comparative
    • N33 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Europe: Pre-1913
    • N35 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Asia including Middle East
    • N40 - Economic History - - Government, War, Law, International Relations, and Regulation - - - General, International, or Comparative
    • N43 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Europe: Pre-1913
    • N45 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Asia including Middle East

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