Borders, Ethnicity and Trade / Jenny C. Aker, Michael W. Klein, Stephen A. O'Connell, Muzhe Yang.

Format:

Book

Author/Creator:

Aker, Jenny C.

Contributor:

National Bureau of Economic Research.

Klein, Michael W.

O'Connell, Stephen A.

Yang, Muzhe.

Series:

Working Paper Series (National Bureau of Economic Research) no. w15960.

NBER working paper series no. w15960

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2010.

Summary:

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.

Notes:

Print version record

May 2010.