Why do borders exist between countries? Most believe today that strict borders must exist to clearly separate the territory over which different governments exert their powers. The U.S. government, for instance, cannot tax people who live within the territory that is under the control of the Russian government. Such a move would be considered an act of aggression.
A 2018 paper by Avidit Acharya and Alexander Lee, “Economic foundations of the territorial state system”, offers an economic explanation as to why the world is divided into many countries with strict borders delineating the powers of various governments. The authors say that respect for territory is in fact so widespread today that, leaving out Antarctica, nearly every square inch of land in the world belongs to a state, and the fraction of this land that was claimed by more than one state in 2000 was only 1.6%.
However, such clear demarcation of territory over which different governments can exert their sovereign powers was not always the norm. Historically, powerful rulers have claimed ownership over the entire world and fought numerous battles to exert control over enemy territory. Competing rulers were often willing to offer protection as a service to the populations residing in different regions in return for the money and goods collected from them. According to the authors, there was thus a vibrant “market for governance” where rulers competed to offer their services and this benefited various groups of people.
But something changed over time and modern nation states began to take control of specific territories within which they could exert their sovereign powers. Acharya and Lee believe that this happened because rulers who previously competed against each other for the patronage of various populations began to cooperate with each other by agreeing to limit their influence to specific regions. Such cooperation for governance was favoured by rulers because it allowed them to gather more revenue from the populations that they ruled over than when they competed against each other, the authors argue. In particular, the authors study how the English and Scottish monarchies began to cooperate and assert their sovereign powers over certain regions and the reasons behind it. Thus, the formation of the nation state with strict borders can be explained as the result of rulers coming together to form an economic cartel that served their personal interests.
