ABSTRACT
Concerns about boundaries are concerns about who does what as much as they are about who gets what. To the extent that social policy is in itself a fundamental tool for the construction of a common national identity, as cogently argued by Banting (1982), understanding how and why unions react to crises sheds light on the mechanisms driving the stability of borders and political contracts. In this chapter the author argues that a key factor to understand why political unions in some cases face demands for secessionism (or pressures to preserve a decentralized status quo) while others opt for political integration lies in the balance between economic heterogeneity and externalities among the members of the union. When economic heterogeneity dominates, a common social contract becomes unfeasible. When externalities across borders pool risks among otherwise heterogeneous units, actors coordinate their political response and integration emerges as a political option.
