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Networks, firms, and trade

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  • Bastos, Paulo
  • Silva, Joana

Abstract

Fixed costs associated with learning about demand and setting up distribution networks are expected to be lower when there are more potential contacts in the destination market, suggesting a greater probability of market entry and larger export revenues. We match historically-determined emigration stocks with detailed firm-level data from Portugal to examine the effect of migrant networks on these export outcomes. We find that larger stocks of emigrants in a given destination increase export participation and intensity. In addition, we show that the former of these effects tends to be more pronounced among firms that are more likely to have close ties with the emigrants. These results are consistent with a multiple-destination version of the Melitz (2003) model featuring market-specific entry costs and idiosyncratic firm-destination demand shocks.

Suggested Citation

  • Bastos, Paulo & Silva, Joana, 2012. "Networks, firms, and trade," Journal of International Economics, Elsevier, vol. 87(2), pages 352-364.
  • Handle: RePEc:eee:inecon:v:87:y:2012:i:2:p:352-364
    DOI: 10.1016/j.jinteco.2011.12.011
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    Cited by:

    1. Cebeci, Tolga & Fernandes, Ana M. & Freund, Caroline & Pierola, Martha Denisse, 2012. "Exporter dynamics database," Policy Research Working Paper Series 6229, The World Bank.
    2. Andreas Hatzigeorgiou & Magnus Lodefalk, 2015. "Trade, Migration and Integration – Evidence and Policy Implications," The World Economy, Wiley Blackwell, vol. 38(12), pages 2013-2048, December.
    3. Sanne Hiller, 2013. "Does immigrant employment matter for export sales? Evidence from Denmark," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 149(2), pages 369-394, June.
    4. Hale, Galina & Candelaria, Christopher & Caballero, Julian & Borisov, Sergey, 2013. "Bank Linkages and International Trade," Working Paper Series 2013-14, Federal Reserve Bank of San Francisco, revised 11 Feb 2016.
    5. Antoine Berthou & Hélène Ehrhart, 2017. "Trade networks and colonial trade spillovers," Review of International Economics, Wiley Blackwell, vol. 25(4), pages 891-923, September.
    6. Ehrhart, Helene & Le Goff, Maelan & Rocher?, Emmanuel & Singh, Raju Jan, 2014. "Does migration foster exports ? evidence from Africa," Policy Research Working Paper Series 6739, The World Bank.
    7. Christopher R. Parsons & L. Alan Winters, 2014. "International migration, trade and aid: a survey," Chapters,in: International Handbook on Migration and Economic Development, chapter 4, pages 65-112 Edward Elgar Publishing.
    8. Hatzigeorgiou, Andreas & Lodefalk, Magnus, 2016. "The Brexit Trade Disruption Revisited," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 0(Number 1), pages 1-18.
    9. Bratti, Massimiliano & De Benedictis, Luca & Santoni, Gianluca, 2018. "Immigrant Entrepreneurs, Diasporas and Exports," IZA Discussion Papers 11280, Institute for the Study of Labor (IZA).
    10. Andreas Hatzigeorgiou & Magnus Lodefalk, 2016. "Migrants’ Influence on Firm-level Exports," Journal of Industry, Competition and Trade, Springer, vol. 16(4), pages 477-497, December.
    11. Muendler, Marc-Andreas & Rauch, James E., 2018. "Do employee spinoffs learn markets from their parents? Evidence from international trade," European Economic Review, Elsevier, vol. 105(C), pages 159-173.
    12. Hatzigeorgiou, Andreas & Lodefalk, Magnus, 2017. "Anti-Migration as a Threat to Internationalization?," Ratio Working Papers 302, The Ratio Institute.
    13. Aksel Erbahar, 2017. "Market Knowledge: Evidence from Importers," Tinbergen Institute Discussion Papers 17-012/VI, Tinbergen Institute.
    14. Hatzigeorgiou, Andreas & Karpaty, Patrik & Kneller, Richard & Lodefalk, Magnus, 2016. "Do Immigrants Spur Offshoring? Firm-Level Evidence," Working Papers 2016:7, Örebro University, School of Business.
    15. Gullstrand , Joakim & Olofsdotter, Karin, 2014. "The Euro Effect on Bystanders," Working Papers 2014:33, Lund University, Department of Economics.

    More about this item

    Keywords

    Networks; Gravity; Export participation and intensity;

    JEL classification:

    • F1 - International Economics - - Trade
    • F2 - International Economics - - International Factor Movements and International Business
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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