The Persistent Relevance of Transborder (Focal) Regions: The Case of the European Blue Banana

Abstract

How much do borders matter? National governments and international organizations have done much to reduce the artificial barriers that impede trade and other cross-border flows, but are we yet in a position where borders can be considered inconsequential, at least in an economic sense? The impact of decreased border obstacles will likely be most pronounced for firms in former border areas, who are confronted with markets, competitors, and other influences from which the border previously insulated them. Among these influences are technological and economic spill-over effects, which may become more pronounced as the border no longer poses an impenetrable barrier. In border regions, the removal of obstacles at borders could lead to cross-border homogenization such that both profit from integration, or both lose as economic activity relocates to other “core” regions. It is also possible though that one such region becomes a “core” region and acts as a magnet to attract economic activities from the other region, leading to an increased divergence between the two regions.