Economic growth and imperialism

Imperialism is often practiced long after it has ceased to be economically profitable. This paper explores the persistence of imperialism along steady-growth paths. If the hegemonic state maximizes domestic welfare, it should eventually give up imperialism because its cost-benefit analysis turns negative. To shed light on contrary historical records, a model of endogenous ideology and war bias is developed in which the political elite cares about self-image. If that concern is strong enough, the political elite gradually identifies with its country’s mission of hegemony and imperialism persists. It is first driven by material concerns and later by ideal ones. Despite its divergent preferences, the population of the hegemonic state is unlikely to rise against imperialism.