Borders Shape Economies

A border can make one side rich and the other poor, even when geography, climate, and culture are identical. Nogales, Arizona and Nogales, Sonora sit on opposite sides of the US-Mexico border.

The economists Daron Acemoglu and James Robinson use Nogales to illustrate how institutional differences created by borders matter more than geography alone. Property rights, rule of law, and governance vary sharply at political boundaries.