Diversity, Identity and Indeterminacy of the Size of Nations: A Critique of the Alesina School from the Viewpoint of Evolutionary Political Economy
Posted: 30 Nov 2006 Last revised: 29 Aug 2008
Date Written: January 15, 2006
Abstract
Recently economists have explored the impact of ethnic and social diversity on nation size and on the relative efficicacy of the production of private and public goods. In a neoclassical framework with perfect and complete information, diversity increases the costs of government, and both the size of government and of the nation are limited. In an evolutionary framework with imperfect and incomplete information there is no necessary causal relation between nation size and diversity, because a) political organization is crucial for the endogenous formation of preferences, b) the separation between private and public goods is open to continuous innovation, and c) heterogeneity plays an important role for the coordination among actors.
Keywords: nation size, endogenous preferences for public goods, economies of scale and scope of political organization, social coordination through heterogeneity
JEL Classification: H11, N40
Suggested Citation: Suggested Citation