Trade Liberalization's Benefit for Border Regions

(University of Geneva, June 22, 2017)

University of Geneva and University of Lausanne researchers investigated the impact of open borders on border regions' employment and wages situation. The team compared Austria before and after the fall of the Iron Curtain. This happening represents a natural development, hence was not anticipated by businesses and politicians, and represents an ideal case to examine the consequences of opening up borders to international trade. The researchers compared municipalities on the Eastern frontier bordering Hungary and Czechoslovakia to similar communes further inside the country. In the timespan from 1990 until 2002, the border municipalities had a four percent higher wage growth and a 14 percent higher cumulative employment growth than the communes further inside the country. These results, however, show the overall picture and some economic sectors may also show job loss. Another study from the University of Lausanne, approaching a region's economic activity by measuring the average brightness of night light, seems to back the finding that border regions benefit more from the liberalization of international trade.