Abstract

How do countries in conflict manage their borders and what are the long-term implications? Little literature focuses on the developmental legacies of military buffer zones. The Habsburg Empire maintained for centuries military colonies along its southern border, where local populations provided military service in exchange for land. Using a geographic regression discontinuity design, I show that municipalities in modern-day Croatia within the former military colony have had less investment in infrastructure, lower interpersonal trust, and weaker trust in formal institutions. I argue that the intensity of imperial investment, the transformation and/or reorganization of local societies, and labor market inflexibility are key determinants in shaping these developmental legacies both in the short and long-run.