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On a cold November night...
On a cold November night...
On a cold November night in 1989, Berliners climbed a border that had divided their city for 28 years. Concrete dust hung in the light; hammers rang; border guards let people spill through the gaps. By morning, a fortification 155 kilometers long, studded with watchtowers and concrete slabs roughly 3.6 meters high, was turning into a street party. The fall of the Berlin Wall on November 9, 1989, became the image of borders switching off in real time.
Economically, that night was a shock to the cost of moving people, goods, and ideas. When Germany was divided, cities in West Germany near the new border lost nearby markets and shrank relative to otherwise similar cities farther away. After reunification, some of that market access returned. At a finer scale inside Berlin, the wall’s removal re-knit commuting flows and densities block by block.
On the other side of the Eurasian continent, the Korean Demilitarized Zone is a 4-kilometer-wide strip running roughly 240 kilometers across the peninsula, an armed absence that has lasted since 1953. The economic divergence it marks is stark: by recent estimates, North Korea’s per-capita income is just around 3–4% of South Korea’s. Geography and history matter, but so do frictions at the line itself. What can cross, who can move, and how predictable tomorrow’s rules will be.
Sometimes borders both wound and reorder the economy at once. The hurried partition of British India in August 1947 triggered one of the largest population movements in modern history. On the order of 14–15 million people were displaced with perhaps 200,000 to 2 million deaths in the process. Commercial ties that once ran east–west were cut and then selectively rebuilt under the logic of two new states. In the early years Pakistan sent more than half its exports to India; seven decades later, official trade shares had shriveled to low single digits, and in 2019 Pakistan suspended most bilateral trade altogether. Economic potential in South Asia remains large.
Brexit did not erect a concrete wall, but it did erect paperwork. Studies find the rise in non-tariff barriers after the UK left the EU raised UK food prices by about 6% and reduced the country’s overall trade intensity relative to its peers. Friction shows up first on supermarket shelves and later in slower-burn impacts on investment and productivity.
This essay asks a simple question: do borders make people and nations poorer? It deals with when and why that might or might not be and accounts for the best attempts to quantify the effects.
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