Abstract
Borders play important roles in the so-called Westphalian system where sovereign-nation states divide global space and co-exist. Borders determine to what geographical extent the political power, economic regulations, language and social relations influence on the people and activities. Concurrently, when national borders are established, a modern capitalist market economy becomes the dominant economic system. The capitalist system was developed under the sovereign state system because each state needed to develop its own economy mainly through mercantilist policies. Thus, for a long time, borders functioned as a political, legal and economic barrier to the outside world.
However, globalization changed the concept of border. Increasing transaction of money, goods, migration and information seem to undermine the function of borders. However, this article argues that this massive cross-border transaction happens because of the separation of political, legal and economic spheres. Money, goods and people move because they seek preferential exchange rates, interest rates, wages and purchasing power. These differences stem from differences in political, legal and economic systems, and it can only be possible if borders divide a geographical sphere. In other words, “borderless” or cross-border activities happen only in a “borderful” world. This article addresses the case of European integration and scrutinizes the role and meaning of borders in Europe, where market integration is more advanced, but still there are various national systems have remained to control the market.
In this analysis of political economy of borders, it employs two different analytical concepts of borders. The first is the ontological border: the physical existence at the edge of a geographical territory. The second is the institutional border: legal and conceptual borders that do not necessarily require physical existence, such as cyber space control or extraterritorial taxation.
Although the role and meaning of border has changed due to globalization, it only happened at the ontological border, and the institutional border remains unchanged. Even in the EU, states maintain a certain level of control because they are responsible for internal affairs (particularly security and employment) and refuse outside intervention. There is a clear distinction between ontological and institutional borders: the integration of Europe certainly transformed the nature of borders from physical barriers to a geographical line, but EU member states maintain their legal and political jurisdiction to use institutional borders for protecting their society. These findings suggest that it is necessary to distinguish the concept of border by its functions, and researchers need to take into account changes in the roles and meanings of border.
