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What is the effect of removing national borders on local economic activity? This article studies this question in a unique historical setup: The Italian unification. The Italian peninsula went from being a patchwork of independent states throughout the entire first half of the 19th century, to an almost completely-unified state in 1861, and fully unified one in 1870. This article investigates the effect of this sudden and unexpected geopolitical change on the spatial distribution of local population growth, a proxy for economic activity. Using a difference-in-difference approach, we show that proximity to a removed border is, on average, associated with an increase in population growth. This average result masks important heterogeneities. First, there can be asymmetric effects on each side of a same border. Second, Piedmont, which endured the least institutional changes is the state with the largest increase in growth. Finally, proximity to the border is also associated with increased variability, an indication of reallocation of economic activity.
