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International Trade and Coordination

Tracing Border Effects

Published online by Cambridge University Press:  27 December 2017

David B. Carter  and
H. E. Goemans
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This article examines how the institutional design of borders affects international trade. The authors explore variation in the effects of borders by comparing new international borders that follow precedent and thus have a prior institutional history with new international borders that lack such an institutional history. The former minimally disrupt—or restore—previous economic networks, while the latter fundamentally disrupt existing economic networks. A variety of empirical tests show that, consistent with this institutional perspective on borders, new international boundaries that follow precedent are associated with significantly faster recovery and greater increase in subsequent trade flows. By contrast, when new international borders are truly new, they disrupt local economic networks, introduce new transaction costs, and impose higher adjustment costs on states, which the authors show to have long-term deleterious effects on trade.

Type
Research Article
Information
World Politics , Volume 70 , Issue 1 , January 2018 , pp. 1 - 52
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Copyright © Trustees of Princeton University 2017 

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