Are Borders Barriers? The Impact of International and Internal Ethnic Borders on Agricultural Markets in West Africa
Jenny C. Aker
Tufts University - The Fletcher School of Law and Diplomacy; Center for Global Development
Michael W. Klein
Tufts University - The Fletcher School of Law and Diplomacy; National Bureau of Economic Research (NBER)
Stephen A. O'Connell
Swarthmore College - Economics Department; University of Oxford - Centre for Study of African Economics
Lehigh University - Department of Economics
April 9, 2010
This paper addresses two important economic issues for Africa: the contribution of national borders and ethnicity to market segmentation and integration between and within countries. Market pair regression analysis provides evidence of higher conditional price dispersion for both a grain and a cash crop between markets separated by the Niger-Nigeria border than between two markets located in the same country. A regression discontinuity analysis also confirms a significant price change at the international border. The international border effect is lower, however, if the cross-border markets share a common ethnicity. Ethnicity is also linked to higher price dispersion within Niger; we find a significant intranational border effect between markets in different ethnic regions of the country. This suggests that ethnic similarities diminishing international border effects could enhance international market integration, and ethnic differences could contribute to intranational market segmentation in sub-Saharan Africa. We provide suggestive evidence that the primary mechanism behind the internal border effect is related to the role of ethnicity in facilitating access to credit in agricultural markets. We argue that the results are not driven by differences in price volatility or observables across borders.
Keywords: Africa, border effects, agriculture, regression discontinuity design
JEL Classification: O1, Q1working papers series
Date posted: July 22, 2010
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