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Borders, Ethnicity and Trade

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

Abstract

Do national borders and ethnicity contribute to market segmentation between and within countries? This paper uses unique and high-frequency data on narrowly-defined goods to gauge the extent to which a national border impedes trade between developing countries (Niger and Nigeria). Using a regression discontinuity approach, we find a significant price change at the national border, but one that is lower in magnitude than that found for industrialized countries. Yet unlike that literature, and in line with important characteristics of African economies, we investigate the role of ethnicity in mitigating and exacerbating the border effect. We find that a common ethnicity is linked to lower price dispersion across countries, yet ethnic diversity creates an internal border within Niger. The primary mechanism behind the internal border effect appears to be related to the role of ethnicity in facilitating access to credit in rural markets.

Suggested Citation

  • Jenny C. Aker & Michael W. Klein & Stephen A. O'Connell & Muzhe Yang, 2010. "Borders, Ethnicity and Trade," NBER Working Papers 15960, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:15960
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    Cited by:

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    2. Mamello A Nchake & Lawrence Edwards & Tresor N Kaya, 2019. "The Size of the Border and Product Market Integration Between Lesotho and South Africa: A Production–Consumption Approach," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 28(1), pages 70-88.
    3. Takeshima, Hiroyuki & Liverpool-Tasie, Lenis Saweda O., 2015. "Fertilizer subsidies, political influence and local food prices in sub-Saharan Africa: Evidence from Nigeria," Food Policy, Elsevier, vol. 54(C), pages 11-24.
    4. Özak, Ömer & Depetris-Chauvin, Emilio, 2020. "Borderline Disorder: (De facto) Historical Ethnic Borders and Contemporary Conflict in Africa," AfricArxiv uqgxv, Center for Open Science.
    5. Jaime de Melo, 2020. "A Dashboard for Trade Policy Diagnostics," Working Papers hal-03004368, HAL.
    6. Bruno Versailles, 2012. "Market Integration and Border Effects in Eastern Africa," Economics Series Working Papers WPS/2012-01, University of Oxford, Department of Economics.
    7. Robinson, Amanda Lea, 2016. "Internal Borders: Ethnic-Based Market Segmentation in Malawi," World Development, Elsevier, vol. 87(C), pages 371-384.
    8. Croke,Kevin & Garcia Mora,Maria Elena & Goldstein,Markus P. & Mensah,Edouard Romeo & O'Sullivan,Michael B., 2020. "Up before Dawn : Experimental Evidence from a Cross-Border Trader Training at the Democratic Republic of Congo?Rwanda Border," Policy Research Working Paper Series 9123, The World Bank.
    9. WALTHER Olivier, 2012. "Regional trade and economic networks in West Africa," LISER Working Paper Series 2012-07, LISER.
    10. Eberhard-Ruiz, Andreas & Moradi, Alexander, 2019. "Regional market integration in East Africa: Local but no regional effects?," Journal of Development Economics, Elsevier, vol. 140(C), pages 255-268.
    11. Roux, Catherine & Santos-Pinto, Luís & Thöni, Christian, 2016. "Home bias in multimarket Cournot games," European Economic Review, Elsevier, vol. 89(C), pages 361-371.
    12. Bruno Versailles, 2012. "Market Intergration and Border Effects in Eastern Africa," CSAE Working Paper Series 2012-01, Centre for the Study of African Economies, University of Oxford.
    13. Jacint Balaguer & Jordi Ripollés, 2018. "Revisiting the importance of border effect in sub‐national regions. Evidence from a quasi‐experimental design," Papers in Regional Science, Wiley Blackwell, vol. 97(4), pages 1113-1130, November.
    14. Balaguer, Jacint & Ripollés, Jordi, 2018. "Disentangling the importance of international border effects. Some evidence from Portugal–Spain based on diesel retailers," Economic Modelling, Elsevier, vol. 72(C), pages 260-269.
    15. Neil Balchin & Lawrence Edwards & Asha Sundaram, 2015. "A Disaggregated Analysis of Product Price Integration in the Southern African Development Community," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 24(3), pages 390-415.
    16. Victoire Girard & Nicolas Berman & Mathieu Couttenier, 2020. "Natural resources and the salience of ethnic identities," NOVAFRICA Working Paper Series wp2007, Universidade Nova de Lisboa, Faculdade de Economia, NOVAFRICA.
    17. John Chiwuzulum Odozi & Caroline Elliott, 2015. "Cross border trade in grain between Nigeria and neighbouring Niger: Risk management assessment along Sokoto Illela-Konni border land," Cogent Economics & Finance, Taylor & Francis Journals, vol. 3(1), pages 1029250-102, December.

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    JEL classification:

    • 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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