Harbingers of dissolution? Grain prices, borders and nationalism in the Habsburg economy before the First World War

This paper explores the pre-First World War Austro-Hungarian economy as a prominent case where growing conflict between various ethnic and national groups within an empire might have contributed to the emergence of internal borders and even its eventual dissolution. To this end we adopt an Engel-and-Rogerstype approach to examine on an annual basis the extent of co-movements in grain prices across a sample of ten regional capital cities in the empire and over the period 1877-1910. There are two key findings. First, the political borders that emerged from 1918 onwards became visible in the price dynamics of grain markets already 20 years before the Great War. Second, this effect of a border before a border can be explained by the extent of language heterogeneity across the various parts of the Habsburg Empire. These results raise several important questions about both the forces that shaped pre-war market integration as well as the economic costs of breaking up the Habsburg customs union after 1918. --Border Effects,Grain Prices,Habsburg Empire,Market Integration,Nationalism,Pre-1914 Europe

Economic Nationalism and Economic Integration: The Austro-Hungarian Empire in the Late Nineteenth Century

This paper seeks to reconcile two seemingly contradictory strands in the literature on economic development in the late nineteenth century Habsburg Empire - one emphasizing the centrifugal impact of rising intra-empire of nationalism, the other stressing significant improvements in market integration across the empire. We argue that the process of market integration was systematically asymmetric, shaped by intensifying intra-empire nationality conflicts. While grain markets in Austria-Hungary became overall more integrated over time, they also became systematically biased: regions with a similar ethno-linguistic composition of their population came to display significantly smaller price gaps between each other than regions with different compositions. The emergence and persistence of this differential integration cannot be explained by changes in infrastructure and transport costs, simple geographical features or asymmetric integration with neighbouring regions abroad. Instead, differential integration along ethno-linguistic lines was driven by the formation of ethno-linguistic networks. Finally, the analysis shows that the emerging pre-war regional integration patterns – shaped by nationalist sentiment – effectively anticipated the post-war settlement: the fault lines along which the Habsburg Empire was to break up eventually are evident in the price data about a quarter of a century or so before the outbreak of the First World War.Habsburg Empire, market integration, nationalism, networks, pre-1914 Europe

Endogenous Borders? The Effects of New Borders on Trade in Central Europe 1885-1933

A large literature on “border effects” in the wake of McCallum (1995) documents the massive impact of borders on trade. However, all these studies suffer from an identification problem. “Border effects” are usually identified from cross-sectional variation alone. We do not know how trade would change in response to a change in borders – the “treatment effect” of borders on trade – simply because trade flows across “future” borders are typically not documented. Nor can we rule out that there is “reverse causation”: that borders run along pre-existing trade patterns rather than shape trade flows. We exploit a natural experiment from history to explore this issue: the many dramatic border changes that were imposed and codified by the peace treaties in 1919 across Europe. We follow Ritschl and Wolf (2008) and implement Ashenfelter’s difference-in-difference estimator in levels on a large, new data set on sub-national trade flows. This allows us to trace the effects of changing borders over time and produces two key results: first, new borders have a large effect on trade. However second, the “treatment effects” of borders tend to be significantly smaller than the pure cross-sectional effects. This is so, because most of the 1919 border changes followed a pattern of trade relations across the region that was clearly visible already before 1914. Borders shape trade, and trade shapes borders.border effects, treatment effects, European history

grain prices, borders and nationalism in the Habsburg economy before the First World War

This paper explores the pre-First World War Austro-Hungarian economy as a prominent case where growing conflict between various ethnic and national groups within an empire might have contributed to the emergence of internal borders and even its eventual dissolution. To this end we adopt an Engel-and- Rogers–type approach to examine on an annual basis the extent of co-movements in grain prices across a sample of ten regional capital cities in the empire and over the period 1877-1910. There are two key findings. First, the political borders that emerged from 1918 onwards became visible in the price dynamics of grain markets already 20 years before the Great War. Second, this effect of a “border before a border” can be explained by the extent of language heterogeneity across the various parts of the Habsburg Empire. These results raise several important questions about both the forces that shaped pre-war market integration as well as the economic costs of breaking up the Habsburg customs union after 1918

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

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

Behavioural individuality in clonal fish arises despite near-identical rearing conditions.

Behavioural individuality is thought to be caused by differences in genes and/or environmental conditions. Therefore, if these sources of variation are removed, individuals are predicted to develop similar phenotypes lacking repeatable individual variation. Moreover, even among genetically identical individuals, direct social interactions are predicted to be a powerful factor shaping the development of individuality. We use tightly controlled ontogenetic experiments with clonal fish, the Amazon molly (Poecilia formosa), to test whether near-identical rearing conditions and lack of social contact dampen individuality. In sharp contrast to our predictions, we find that (i) substantial individual variation in behaviour emerges among genetically identical individuals isolated directly after birth into highly standardized environments and (ii) increasing levels of social experience during ontogeny do not affect levels of individual behavioural variation. In contrast to the current research paradigm, which focuses on genes and/or environmental drivers, our findings suggest that individuality might be an inevitable and potentially unpredictable outcome of development