An earlier version of this paper was presented at a conference on "Conflict and Rent-Seeking" at the University of California, Irvine, in May 1994. I would like to thank the participants at that conference and at a Columbia University Political Economy Seminar in September 1994 for very helpful comments. Several friends and colleagues have also given me the benefit of their criticism. Though I cannot mention all of them I must acknowledge in particular the comments of David Bloom, Alessandra Casella, Richard Clarinda, Andrew Newman, Stanislaw Wellisz and Murray Wolfson. All remaining defects are of course my own responsibility.

"The question of the size of political units never seems to attract among historians and sociologists the attention which it deserves. What determines why states and empires have expanded to the limits which they have historically achieved? What are the conditions under which it has been possible to maintain those frontiers? Why have the larger states normally broken up into fragments after a certain period of time? As a general problem--distinct from the specific question of why particular units have disintegrated--this is still largely unexplored territory."

Adding economists to historians and sociologists in the first sentence of this equation from the eminent Sinologist Mark Elvin (1973, p. 17) only enhances its salience. In so far as they are considered at all in economics, the boundaries of a given economic system or "country" are generally regarded as given, along with the population living within those boundaries. Yet it is obvious that however sanctified these boundaries may have become in international law they were all at one time or another contested between rival claimants and determined ultimately by the balance of economic and military forces, which have however generally been regarded as independent factors.