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Bound by Ancestors: Immigration, Credit Frictions, and Global Supply Chain Formation

In: International Fragmentation, Supply Chains, and Financial Frictions

Author

Listed:
  • Jaerim Choi
  • Jay Hyun
  • Ziho Park

Abstract

This paper shows that the ancestry composition shaped by century-long immigration to the US can explain the current structure of global supply chains. Using an instrumental variable strategy combined with a novel dataset that links firm-to-firm global supply chains with their location information and historical migration data, we find that the co-ethnic networks have a positive causal impact on global supply chain relationships between foreign countries and US counties. The positive impact not only exists in supplier–customer relationships but also extends to strategic partnerships and trade in services. The positive impact is stronger in counties in which a larger number of firms are credit constrained, and such a stronger effect becomes even more pronounced when foreign firms are located in countries with weak contract enforcement. The results suggest that co-ethnic networks serve as social collateral to overcome credit constraints and facilitate global supply chain formation.
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Suggested Citation

  • Jaerim Choi & Jay Hyun & Ziho Park, 2023. "Bound by Ancestors: Immigration, Credit Frictions, and Global Supply Chain Formation," NBER Chapters, in: International Fragmentation, Supply Chains, and Financial Frictions, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:15282
    Note: CF DEV IFM ITI
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    Cited by:

    1. is not listed on IDEAS
    2. Zhiyuan Li & Bing Lu & Sili Zhou, 2024. "Production Leakage: Evidence from Uncoordinated Environmental Policies," Working Papers 202413, University of Macau, Faculty of Business Administration.
    3. Choi, Jaerim & Hyun, Jay & Kim, Gueyon & Park, Ziho, 2025. "The cleanup of US manufacturing through pollution offshoring," Journal of International Economics, Elsevier, vol. 154(C).
    4. McCully, Brett A., 2024. "Immigrants, legal status, and illegal trade," Journal of International Economics, Elsevier, vol. 152(C).
    5. Jeffrey H. Bergstrand & Jordi Paniagua, 2024. "Do Deep Trade Agreements’ Provisions Actually Increase – or Decrease – Trade and/or FDI?," CESifo Working Paper Series 11526, CESifo.

    More about this item

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F60 - International Economics - - Economic Impacts of Globalization - - - General
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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