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Borders, ethnicity and trade

Author

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  • Aker, Jenny C.
  • Klein, Michael W.
  • O'Connell, Stephen A.
  • Yang, Muzhe

Abstract

This paper uses unique high-frequency data on prices of two agricultural goods to examine the additional costs incurred in cross-border trade between Niger and Nigeria, as well as trade between ethnically distinct markets within Niger. We find a sharp and significant conditional price change of about 20 to 25% between markets immediately across the national border. This price change is significantly lower when markets on either side of the border share a common ethnicity. Within Niger, trade between ethnically distinct regions exhibits an ethnic border effect that is comparable, in its magnitude, to the national border effect between Niger and Nigeria. Our results suggest that having a common ethnicity may reduce the transaction costs associated with agricultural trade, especially the costs associated with communicating and providing credit.

Suggested Citation

  • Aker, Jenny C. & Klein, Michael W. & O'Connell, Stephen A. & Yang, Muzhe, 2014. "Borders, ethnicity and trade," Journal of Development Economics, Elsevier, vol. 107(C), pages 1-16.
    • Handle: RePEc:eee:deveco:v:107:y:2014:i:c:p:1-16
    DOI: 10.1016/j.jdeveco.2013.10.004
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    More about this item

    Keywords

    Africa; Border costs; Agriculture; Ethnicity;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture

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