Skip to main content
Article thumbnail
Location of Repository

On the origins of border effects: insights from the Habsburg Customs Union

By Max-Stephan Schulze and Nikolaus Wolf


This paper examines the emergence and dynamics of border effects over time. We exploit the unique historical setting of the multi-national Habsburg Empire prior to the Great War to explore the hypothesis that border effects emerged as a result of persistent trade effects of ethno-linguistic networks within an overall integrating economy. While markets tended to integrate, the process was strongly asymmetric and shaped by a simultaneous rise in national consciousness and organisation among Austria-Hungary’s different ‘nationalities’. We find that the political borders which separated the empire’s successor states after the First World War became visible in the price dynamics of grain markets already 25-30 years before the First World War. This effect of a ‘border before a border’ cannot be explained by factors such as physical geography, changes in infrastructure or patterns of asymmetric integration with neighbouring regions outside of the Habsburg customs and monetary union. However, controlling for the changing ethno-linguistic composition of the population across the regional capital cities of the empire does explain most of the estimated border effects

Topics: DB
Publisher: University of Warwick. Centre for the Study of Globalisation and Regionalisation
Year: 2007
OAI identifier:

Suggested articles


  1. (1904). (d) Eisenbahn- und Strassenkarte der oesterreichisch-ungarischen Monarchie
  2. (1913). (e) Uebersichtskarte der Eisenbahnen der oesterreichisch-ungarischen Monarchie
  3. (2005). A Spatial Theory of Trade’, doi
  4. (2005). Austria-Hungary’s Economy in World War I’, doi
  5. (2003). Border Effects and the Availability of Domestic Products Abroad’, Unpublished manuscript, Federal Reserve Board.
  6. (1890). Census (1880-1910): K.k. Statistische Central-Commission, ‘Die Ergebnisse der Volkszählung vom 31.
  7. (1950). Ceny w Krakowie w latach 1796-1914’,
  8. (1934). Ceny we lwowie w latach 1701-1914’, Badania z Dziejow Spolecznych
  9. (2003). Concepts of Economic Integration in Austria During the Twentieth Century’, doi
  10. (1949). Constitutional Aspects of the Struggle between Germans and Czechs in the AustroHungarian Monarchy’, doi
  11. (1993). Contract Enforceability and Economic Institution in Early Trade: The Maghribi Traders Coalition’, doi
  12. (1961). Die Industrialisierung Österreichs’,
  13. (2005). Distorted Gravity: Heterogeneous Firms,
  14. (1962). Economic Backwardness in Historical Perspective doi
  15. (2005). Economic Integration across Borders: the Polish Interwar Economy 1921-1937’, doi
  16. (1989). Economic Policy and Economic Development in Austria-Hungary, 1867-1913’, doi
  17. (1900). Eisenbahn-, Post- und Communicationskarte von Oesterreich-Ungarn
  18. (1883). Eisenbahn-Karte, gezeichnet und bearbeitet von T. v. Bomsdorff
  19. (2006). forthcoming), doi
  20. (2005). From political fragmentation towards a customs union: Border effects of the German Zollverein, 1815 to 1855’, doi
  21. (2003). Gravity with Gravitas: A Solution to the Border Puzzle’, doi
  22. (2002). Illusory Border Effects: Distance Mismeasurement Inflates Estimates of Home Bias in Trade”, CEPII Working paper.
  23. (1878). Kilometer-Zeiger fuer die Eisenbahnen Oesterreich-Ungarns
  24. Kilometerzeiger zu den allgemeinen und Militaer-Tarifen der oesterreichischungarischen Eisenbahnen
  25. (1913). Központi Statisztikai Hivatal, doi
  26. Központi Statisztikai Hivatal, Magyar Statisztikai Évkönyv, doi
  27. (1992). Language and Identity’,
  28. (1995). National Borders Matter: Canada-US Regional Trade Patterns’,
  29. (1912). Offizieller Kilometerzeiger der saemtlichen oesterreichisch-ungarischen und bosnisch-hercegovinischen Eisenbahnen
  30. (2007). Origins of Catch-Up Failure: Comparative Productivity Growth in the Habsburg Empire, 1870-1910’, doi
  31. (2005). Path Dependent Border Effects: the Case of Poland’s Reunification doi
  32. (2000). Patterns of Growth and Stagnation in the Late 19 th Century Habsburg Economy’, doi
  33. (2004). Potential Pitfalls for the Purchasing Power Parity Puzzle? Sampling and Specification Biases in Mean Reversion Tests of the Law of One Price’, doi
  34. Railway Distances (1878-1913): (a) Eisenbahn-Karte von Oesterreich-Ungarn, bearb. von T.
  35. (2003). Revisiting the Border: An Assessment of the Law of One Price Using very Disaggregated Consumer Price Data’, Board of Governors of the Federal Reserve System, International Finance Discusssion Papers, No 777. doi
  36. (1997). Some Reflections on the Habsburg Empire and Its Legacy in the Nationalities Question’, doi
  37. Statistische Central-Commission, Österreichisches Statistisches Handbuch,
  38. Statistische Central-Commission, Statistisches Jahrbuch der österreichischen Monarchie,
  39. (1989). Stature, Nutrition and Economic Development in the Eighteenth Century Habsburg Monarchy: The ‘Austrian’ Model of the Industrial Revolution doi
  40. (2001). The Decline and Fall of the Habsburg Empire, doi
  41. (1984). The Economic Rise of the Habsburg Empire, doi
  42. (1997). The Habsburg Empire’, doi
  43. (1948). The Habsburg Monarchy 1809-1918: A History of f the Austrian Empire and Austria-Hungary (London). doi
  44. (1983). The Habsburg Monarchy as a Customs Union. doi
  45. (2000). The Russian Empire and its Rivals doi
  46. (2004). The Trade-creating Effects of Business and Social Networks: Evidence from France’, doi
  47. (2005). Trade Responses to Geographic Frictions: A Decomposition Using Micro-Data” doi
  48. (2004). Zwischen ökonomischer Interessenvertretung und national-kultureller Selbstbehauptung. Zum Wirtschaftsnationalismus in Ostmitteleuropa vor 1914’, Zeitschrift für Ostmitteleuropa-Forschung,

To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.