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

Hans Heinemeyer ()

No 2006/14, Discussion Papers from Free University Berlin, School of Business & Economics

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.

Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:fubsbe:200614

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