Sasha Petrov

National borders govern trading opportunities and eligibility for public services. There is suggestive evidence that African long-term development has been harmed by post-colonial border design through these two channels. This paper offers a spatial model of borders that tracks their welfare consequences through trade and public goods provision. It features four key forces: benefits of economic and fiscal integration, and costs of preference heterogeneity and span of control. To evaluate inefficiencies of borders, I set up an Optimal Borders problem whose solution provides a benchmark and develop a strategy to make it tractable. I calibrate parameters of the spatial model and use the proposed method of solving the Optimal Borders problem on African data. Africa could gain at least 28% in welfare with optimal borders. The primary shortcoming of current borders is their geographic position, not the number of countries.