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On the Declining Political Support for Economic Unions

Summary:
In an NBER working paper, Gino Gancia, Giacomo Ponzetto, and Jaume Ventura propose a theory of declining public support for economic unions: Broad gains from trade in differentiated goods make way for distributive conflict due to specific factors: … this is partly due to the growth of trade between countries that are increasingly dissimilar. … political support for international unions can grow with their breadth and depth as long as member countries are sufficiently similar. However, differences in economic size and factor endowments can trigger disagreement over the value of unions between and within countries. The model is consistent with some salient features of the process of European integration and statistical evidence from survey data.

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In an NBER working paper, Gino Gancia, Giacomo Ponzetto, and Jaume Ventura propose a theory of declining public support for economic unions: Broad gains from trade in differentiated goods make way for distributive conflict due to specific factors:

… this is partly due to the growth of trade between countries that are increasingly dissimilar. … political support for international unions can grow with their breadth and depth as long as member countries are sufficiently similar. However, differences in economic size and factor endowments can trigger disagreement over the value of unions between and within countries. The model is consistent with some salient features of the process of European integration and statistical evidence from survey data.

Dirk Niepelt
Dirk Niepelt is Director of the Study Center Gerzensee and Professor at the University of Bern. A research fellow at the Centre for Economic Policy Research (CEPR, London), CESifo (Munich) research network member and member of the macroeconomic committee of the Verein für Socialpolitik, he served on the board of the Swiss Society of Economics and Statistics and was an invited professor at the University of Lausanne as well as a visiting professor at the Institute for International Economic Studies (IIES) at Stockholm University.

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