ABSTRACT
The dynamics that the border economy creates reflects itself mainly within intergroup relations of ethnic identities. Social contact with the other is an important determinant in the construction of the ethnic identity and continuation of the group identity. Ethnic groups define themselves by looking at the other. The Lazi who live at the center of the district benefited more from modernizing processes like education and advanced in jobs like civil service and trade. The Hemshins who were living in the villages could not take their share of these a lot. Expectations and demands from the urban life of the Hemshins, who became effective figures in the economic and social life with the opening up of the border, have increased trade and every institution of the administration. Economic and political dominance of Lazis, which has lasted many years, seems to have come to a halt by the balancing of power and thanks to the border economy.
