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Network effects on international trade

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  • Lee, Jaehwa

Abstract

Empirical findings from the gravity model using a bilateral data set of 23 OECD countries provide strong support for the network effect of FDI, migration, and the Internet on international trade. Further, the findings show differences in the network effect between the manufacturing and service sectors. The Internet is the most important channel for the network effect for both the manufacturing and service sectors, whereas migration is important only for the manufacturing sector.

Suggested Citation

  • Lee, Jaehwa, 2012. "Network effects on international trade," Economics Letters, Elsevier, vol. 116(2), pages 199-201.
    • Handle: RePEc:eee:ecolet:v:116:y:2012:i:2:p:199-201
    DOI: 10.1016/j.econlet.2012.02.017
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    References listed on IDEAS

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    1. Freund, Caroline L. & Weinhold, Diana, 2004. "The effect of the Internet on international trade," Journal of International Economics, Elsevier, vol. 62(1), pages 171-189, January.
    2. Marion Jansen & Roberta Piermartini, 2009. "Temporary Migration and Bilateral Trade Flows," The World Economy, Wiley Blackwell, vol. 32(5), pages 735-753, May.
    3. Albuquerque, Rui & Loayza, Norman & Serven, Luis, 2005. "World market integration through the lens of foreign direct investors," Journal of International Economics, Elsevier, vol. 66(2), pages 267-295, July.
    4. Greaney, Theresa M., 2005. "Measuring network effects on trade: Are Japanese affiliates distinctive?," Journal of the Japanese and International Economies, Elsevier, vol. 19(2), pages 194-214, June.
    5. Deborah L. Swenson, 2004. "Foreign Investment and the Mediation of Trade Flows," Review of International Economics, Wiley Blackwell, vol. 12(4), pages 609-629, September.
    6. Caroline Freund & Diana Weinhold, 2002. "The Internet and International Trade in Services," American Economic Review, American Economic Association, vol. 92(2), pages 236-240, May.
    7. Greaney, Theresa M., 2009. "Measuring network effects on trade: A reexamination," Japan and the World Economy, Elsevier, vol. 21(3), pages 219-225, August.
    8. Choi, Changkyu, 2010. "The effect of the Internet on service trade," Economics Letters, Elsevier, vol. 109(2), pages 102-104, November.
    9. James E. Rauch, 2001. "Business and Social Networks in International Trade," Journal of Economic Literature, American Economic Association, vol. 39(4), pages 1177-1203, December.
    10. James E. Rauch & Vitor Trindade, 2002. "Ethnic Chinese Networks In International Trade," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 116-130, February.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

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    2. Albert Millogo & Ines Trojette, 2020. "Pro-trade effects of MENA immigrants in France: does governance matter?," Economics Bulletin, AccessEcon, vol. 40(4), pages 3219-3230.
    3. Huang, Ting Ting & Sun, Bruce Qiang, 2016. "The impact of the Internet on global industry: New evidence of Internet measurement," Research in International Business and Finance, Elsevier, vol. 37(C), pages 93-112.
    4. Visser, Robin, 2019. "The effect of the internet on the margins of trade," Information Economics and Policy, Elsevier, vol. 46(C), pages 41-54.
    5. Najarzadeh, Reza & Rahimzadeh, Farzad & Reed, Michael, 2014. "Does the Internet increase labor productivity? Evidence from a cross-country dynamic panel," Journal of Policy Modeling, Elsevier, vol. 36(6), pages 986-993.
    6. Lianyue Feng & Helian Xu & Gang Wu & Wenting Zhang, 2021. "Service trade network structure and its determinants in the Belt and Road based on the temporal exponential random graph model," Pacific Economic Review, Wiley Blackwell, vol. 26(5), pages 617-650, December.
    7. Zhao, Jiayang & Liu, Jie, 2023. "Homogeneous analysis on network effects in network autoregressive model," Finance Research Letters, Elsevier, vol. 58(PD).
    8. Zi Hui Yin & Chang Hwan Choi, 2023. "The effects of China’s cross-border e-commerce on its exports: a comparative analysis of goods and services trade," Electronic Commerce Research, Springer, vol. 23(1), pages 443-474, March.

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    More about this item

    Keywords

    Network; Migration; FDI; Internet; Trade;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F10 - International Economics - - Trade - - - General
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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