IDEAS home Printed from https://ideas.repec.org/p/zbw/fubsbe/200614.html

The impact of new borders on trade: World War I and the economic disintegration of Central Europe

Author

Listed:
  • Heinemeyer, Hans Christian

Abstract

This paper investigates the impact of changes in national border demarcation on economic integration. It treats the national breakups in Central Europe due to WWI as a natural experiment, which allows for evaluating the particular effect of new national borders. A gravity model of trade is used to analyze goods-specific trade among Central European regions. The main results are, first, that the treatment effect of new borders is large. Second, decomposing the border effect provides evidence of a 'border before border' for parts of Germany that became separated even before WWI. Third, the analysis indicates a high level of economic integration before WWI among Polish regions that became politically unified only after the war.

Suggested Citation

  • Heinemeyer, Hans Christian, 2006. "The impact of new borders on trade: World War I and the economic disintegration of Central Europe," Discussion Papers 2006/14, Free University Berlin, School of Business & Economics.
    • Handle: RePEc:zbw:fubsbe:200614
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/28040/1/517667185.PDF
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Volker Nitsch, 2000. "National borders and international trade: evidence from the European Union," Canadian Journal of Economics, Canadian Economics Association, vol. 33(4), pages 1091-1105, November.
    2. James E. Anderson & Eric van Wincoop, 2004. "Trade Costs," Journal of Economic Literature, American Economic Association, vol. 42(3), pages 691-751, September.
    3. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
    4. Jan Fidrmuc & Jarko Fidrmuc, 2003. "Disintegration and Trade," Review of International Economics, Wiley Blackwell, vol. 11(5), pages 811-829, November.
    5. Enrico Spolaore & Alberto Alesina & Romain Wacziarg, 2000. "Economic Integration and Political Disintegration," American Economic Review, American Economic Association, vol. 90(5), pages 1276-1296, December.
    6. Georges Ménil & Mathilde Maurel, 1994. "Breaking up a customs union: The case of the Austro-Hungarian Empire in 1919," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 130(3), pages 553-575, September.
    7. Russell Hillberry & David Hummels, 2003. "Intranational Home Bias: Some Explanations," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 1089-1092, November.
    8. Wolf, Nikolaus, 2006. "Was Germany ever united? Borders and domestic trade, 1885 - 1933," Discussion Papers 2006/4, Free University Berlin, School of Business & Economics.
    9. Keith Head & Thierry Mayer, 2000. "Non-Europe: The magnitude and causes of market fragmentation in the EU," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 136(2), pages 284-314, June.
    10. Wolf, Nikolaus, 2005. "Path dependent border effects: the case of Poland's reunification (1918-1939)," Explorations in Economic History, Elsevier, vol. 42(3), pages 414-438, July.
    11. McCallum, John, 1995. "National Borders Matter: Canada-U.S. Regional Trade Patterns," American Economic Review, American Economic Association, vol. 85(3), pages 615-623, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Flynn, Eimear & Kren, Janez & Lawless, Martina, 2021. "Early reactions of EU-UK trade flows to Brexit," Papers WP713, Economic and Social Research Institute (ESRI).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Agnosteva, Delina E. & Anderson, James E. & Yotov, Yoto V., 2019. "Intra-national trade costs: Assaying regional frictions," European Economic Review, Elsevier, vol. 112(C), pages 32-50.
    2. Salas-Olmedo, María Henar & García, Patricia & Gutiérrez, Javier, 2015. "Accessibility and transport infrastructure improvement assessment: The role of borders and multilateral resistance," Transportation Research Part A: Policy and Practice, Elsevier, vol. 82(C), pages 110-129.
    3. Cletus C. Coughlin & Dennis Novy, 2013. "Is the International Border Effect Larger than the Domestic Border Effect? Evidence from US Trade," CESifo Economic Studies, CESifo Group, vol. 59(2), pages 249-276, June.
    4. Salvador Gil-Pareja & Rafael Llorca & Josè A. Martinez-Serrano, 2011. "Is There A Continental Bias In Trade?," ERSA conference papers ersa10p792, European Regional Science Association.
    5. Benedikt Herz & Xosé-Luís Varela-Irimia, 2020. "Border effects in European public procurement [Information costs and home bias: an analysis of US holdings of foreign equities]," Journal of Economic Geography, Oxford University Press, vol. 20(6), pages 1359-1405.
    6. James E. Anderson & Eric van Wincoop, 2004. "Trade Costs," Journal of Economic Literature, American Economic Association, vol. 42(3), pages 691-751, September.
    7. Nicholas Crafts & Alexander Klein, 2015. "Geography and intra-national home bias: U.S. domestic trade in 1949 and 2007," Journal of Economic Geography, Oxford University Press, vol. 15(3), pages 477-497.
    8. repec:wti:papers:910 is not listed on IDEAS
    9. Cletus C. Coughlin & Dennis Novy, 2021. "Estimating Border Effects: The Impact Of Spatial Aggregation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 62(4), pages 1453-1487, November.
    10. Volker Nitsch & Nikolaus Wolf, 2013. "Tear down this wall: on the persistence of borders in trade," Canadian Journal of Economics, Canadian Economics Association, vol. 46(1), pages 154-179, February.
    11. Gil-Pareja, Salvador & Llorca-Vivero, Rafael & Martínez-Serrano, José Antonio, 2008. "Trade effects of monetary agreements: Evidence for OECD countries," European Economic Review, Elsevier, vol. 52(4), pages 733-755, May.
    12. Wolf, Nikolaus, 2009. "Was Germany Ever United? Evidence from Intra- and International Trade, 1885–1933," The Journal of Economic History, Cambridge University Press, vol. 69(3), pages 846-881, September.
    13. Salvador Gil-Pareja & Rafael Llorca-Vivero & José Martínez-Serrano, 2015. "The Uneven Impact of Continental Boundaries on Trade," Open Economies Review, Springer, vol. 26(2), pages 237-257, April.
    14. Nitsch, Volker, 2002. "Border Effects and Border Regions: Lessons from the German Unification," Discussion Paper Series 26291, Hamburg Institute of International Economics.
    15. Anderson, James E. & Borchert, Ingo & Mattoo, Aaditya & Yotov, Yoto V., 2018. "Dark costs, missing data: Shedding some light on services trade," European Economic Review, Elsevier, vol. 105(C), pages 193-214.
    16. Wolf, Nikolaus, 2005. "Path dependent border effects: the case of Poland's reunification (1918-1939)," Explorations in Economic History, Elsevier, vol. 42(3), pages 414-438, July.
    17. Chen, Natalie & Novy, Dennis, 2011. "Gravity, trade integration, and heterogeneity across industries," Journal of International Economics, Elsevier, vol. 85(2), pages 206-221.
    18. Balistreri, Edward J. & Hillberry, Russell H., 2007. "Structural estimation and the border puzzle," Journal of International Economics, Elsevier, vol. 72(2), pages 451-463, July.
    19. Chen, Natalie, 2006. "Erratum to "Intra-national versus international trade in the European Union: Why do national borders matter?" [J. Int. Econ. 63 (2004) 93-118]," Journal of International Economics, Elsevier, vol. 70(1), pages 334-335, September.
    20. Asier Minondo, 2007. "The disappearance of the border barrier in some European Union countries' bilateral trade," Applied Economics, Taylor & Francis Journals, vol. 39(1), pages 119-124.
    21. Carlos Llano‐Verduras & Asier Minondo & Francisco Requena‐Silvente, 2011. "Is the Border Effect an Artefact of Geographical Aggregation?," The World Economy, Wiley Blackwell, vol. 34(10), pages 1771-1787, October.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:fubsbe:200614. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/fwfubde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.