| Contrary to what trade liberalisation may
suggest, national borders still matter. Even for similar size and distance, regions
trade less when separated by a border. An assessment of border effects, with respect
to a given trade norm derived from a gravity model, makes it possible to measure
the degree of integration or fragmentation of a geographic zone, or even measure
the discrimination which may exist between different supply sources. How are strong
border effects between integrated regions to be explained? Exchange volatility
is part of the answer. Consumer preferences and the existence of social or business
networks which are especially dense within borders also explain this phenomenon.
Nevertheless, long term data indicate that border effects are declining, a trend
which new information technologies may accelerate. |
Abstract |
