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Ethnic Networks, Information, and International Trade: Revisiting the Evidence

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  • Gabriel J. Felbermayr
  • Benjamin Jung
  • Farid Toubal

Abstract

Co-ethnic networks foster trade by providing information about trading opportunities and taking advantage of mutual trust. While the economics literature usually focuses on direct ethnic links between source and host countries, sociological studies adopt a broader perspective. They emphasize the role of ethnic minorities as middlemen who organize trade between various regions in the world. Rauch and Trindade [2002] study those indirect links between ethnic Chinese in different host countries. We revisit their work, particularly focusing on the trade-cost channel. Moreover, we extend the analysis to all potential ethnic networks. Using new data on bilateral stocks of migrants from the World Bank for the year of 2000, we find that the trade creating potential of the Chinese network is dwarfed by other ethnic networks, e. g., the Polish, the Turkish, the Mexican, or the Pakistani networks. The large heterogeneity in the pro-trade effect of different networks is, among other things, explained by the share of high-skilled immigrants, the degree of ethnic fragmentation, and GDP per capita

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  • Gabriel J. Felbermayr & Benjamin Jung & Farid Toubal, 2010. "Ethnic Networks, Information, and International Trade: Revisiting the Evidence," Annals of Economics and Statistics, GENES, issue 97-98, pages 41-70.
  • Handle: RePEc:adr:anecst:y:2010:i:97-98:p:41-70
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    Cited by:

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    2. Mariya Aleksynska & Giovanni Peri, 2014. "Isolating the Network Effect of Immigrants on Trade," The World Economy, Wiley Blackwell, vol. 37(3), pages 434-455, March.
    3. Murat Genc & Masood Gheasi & Peter Nijkamp & Jacques Poot, 2012. "The impact of immigration on international trade: a meta-analysis," Chapters, in: Peter Nijkamp & Jacques Poot & Mediha Sahin (ed.), Migration Impact Assessment, chapter 9, pages 301-337, Edward Elgar Publishing.
    4. Heid, Benedikt & Larch, Mario, 2012. "Migration, trade and unemployment," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 6, pages 1-40.
    5. Stefano Breschi & Francesco Lissoni & Ernest Miguelez, 2017. "Foreign-origin inventors in the USA: testing for diaspora and brain gain effects," Journal of Economic Geography, Oxford University Press, vol. 17(5), pages 1009-1038.
    6. Rodolfo Metulini & Paolo Sgrignoli & Stefano Schiavo & Massimo Riccaboni, 2018. "The network of migrants and international trade," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 35(3), pages 763-787, December.
    7. Michał Burzyński & Frédéric Docquier & Hillel Rapoport, 2018. "The Changing Structure of Immigration to the OECD: What Welfare Effects on Member Countries?," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 66(3), pages 564-601, September.
    8. Egger, Peter H. & Ehrlich, Maximilian v. & Nelson, Douglas R., 2020. "The trade effects of skilled versus unskilled migration," Journal of Comparative Economics, Elsevier, vol. 48(2), pages 448-464.
    9. Sanne Hiller, 2014. "The Export Promoting Effect of Emigration: Evidence from Denmark," Review of Development Economics, Wiley Blackwell, vol. 18(4), pages 693-708, November.
    10. Danny McGowan & Chris Milner, 2011. "Trade Costs and Trade Composition," Discussion Papers 11/11, University of Nottingham, GEP.
    11. Felbermayr, Gabriel & Grossmann, Volker & Kohler, Wilhelm, 2012. "Migration, International Trade and Capital Formation: Cause or Effect?," IZA Discussion Papers 6975, Institute of Labor Economics (IZA).
    12. Christopher Parsons, 2011. "Do Migrants Really Foster Trade? The Trade-Migration Nexus, a Panel Approach 1960-2000," Discussion Papers 11/10, University of Nottingham, GEP.
    13. Jens Wrona, 2018. "Border Effects Without Borders: What Divides Japan's Internal Trade?," CESifo Working Paper Series 7056, CESifo.
    14. Pierre-Louis Vézina, 2012. "How Migrant Networks Facilitate Trade: Evidence from Swiss Exports," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 148(III), pages 449-476, September.
    15. Lin, Xiaohua & Yang, Xiyan, 2017. "From human capital externality to entrepreneurial aspiration: Revisiting the migration-trade linkage," Journal of World Business, Elsevier, vol. 52(3), pages 360-371.
    16. Anthony Edo & Lionel Ragot & Hillel Rapoport & Sulin Sardoschau & Andreas Steinmayr & Arthur Sweetman, 2020. "An introduction to the economics of immigration in OECD countries," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 53(4), pages 1365-1403, November.
    17. Samuel Admassu, 2019. "A comparative analysis of African and Asian migrants’ effect on trade," Empirical Economics, Springer, vol. 56(6), pages 2079-2092, June.
    18. Pierre-Louis Vézina, 2010. "Migrant Networks as substitute for institutions: Evidence from Swiss trade," IHEID Working Papers 03-2010, Economics Section, The Graduate Institute of International Studies.
    19. Hiller, Sanne, 2011. "Does Immigrant Employment Matter for Exports? Evidence From Denmark," Working Papers 11-16, University of Aarhus, Aarhus School of Business, Department of Economics.
    20. Hélène Ehrhart & Maëlan Le Goff & Emmanuel Rocher & Raju Jan Singh, 2012. "Does Migration Foster Exports? An African Perspective," Working Papers 2012-38, CEPII research center.
    21. Hatzigeorgiou, Andreas & Lodefalk, Magnus, 2017. "Anti-Migration as a Threat to Internationalization?," Ratio Working Papers 302, The Ratio Institute.
    22. Xiu-Mei Fu & Han-Xue Chen & Zhen-Kai Xue, 2018. "Construction of the Belt and Road Trade Cooperation Network from the Multi-Distances Perspective," Sustainability, MDPI, Open Access Journal, vol. 10(5), pages 1-16, May.
    23. Inmaculada Martínez‐Zarzoso & Robert Rudolf, 2020. "The trade facilitation impact of the Chinese diaspora," The World Economy, Wiley Blackwell, vol. 43(9), pages 2411-2436, September.
    24. Docquier, Frédéric & Iftikhar, Zainab, 2019. "Brain drain, informality and inequality: A search-and-matching model for sub-Saharan Africa," Journal of International Economics, Elsevier, vol. 120(C), pages 109-125.
    25. Magnus Lodefalk, 2016. "Temporary expats for exports: micro-level evidence," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(4), pages 733-772, November.

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    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

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