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Ethnic Networks and International Trade

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  • Epstein, Gil S
  • Gang, Ira

Abstract

There is a well-established high quality literature on the role of networks, particularly ethnic networks, in international trade. Ethnic networks are a way of overcoming informal barriers (information costs, risk and uncertainty) to trade by building trust and substituting for the difficulty of enforcing contracts internationally. The networks we are interested in are those that form between migrants and natives in the host country and between migrants and their home country. Ethnic networks exist when assimilation is not complete. We consider the struggle of migrants to assimilate and, at the same time, the struggle of the local population to prevent such assimilation. These activities affect trade possibilities. Moreover, we show that it may well be in the interest of migrants who specialize in trade to, at some point in time, turn from investing in assimilation activities and instead invest in anti-assimilation activities in order to preserve immigrants’ preferences for home country goods.

Suggested Citation

  • Epstein, Gil S & Gang, Ira, 2004. "Ethnic Networks and International Trade," CEPR Discussion Papers 4616, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:4616
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    References listed on IDEAS

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    9. Anh T. Le, 1999. "Empirical Studies of Self‐Employment," Journal of Economic Surveys, Wiley Blackwell, vol. 13(4), pages 381-416, September.
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    Citations

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    Cited by:

    1. Gil S. Epstein & Ira N. Gang, 2010. "A Political Economy of the Immigrant Assimilation: Internal Dynamics," Working Papers 2010-13, Bar-Ilan University, Department of Economics.
    2. Thomas Siedler, 2007. "Does Parental Unemployment Cause Right-Wing Extremism?," Discussion Papers of DIW Berlin 666, DIW Berlin, German Institute for Economic Research.
    3. Gil S. Epstein & Ira N. Gang, 2009. "Ethnicity, assimilation, and harassment in the labor market," Research in Labor Economics, in: Amelie F. Constant & Konstantinos Tatsiramos & Klaus F. Zimmermann (ed.), Ethnicity and Labor Market Outcomes, volume 29, pages 67-88, Emerald Publishing Ltd.
    4. Gil Epstein, 2007. "Extremism within the family," Journal of Population Economics, Springer;European Society for Population Economics, vol. 20(3), pages 707-715, July.
    5. Siedler, Thomas, 2006. "Family and Politics: Does Parental Unemployment Cause Right-Wing Extremism?," IZA Discussion Papers 2411, Institute of Labor Economics (IZA).
    6. Sergio Vergalli, 2011. "Entry and Exit Strategies in Migration Dynamics," Journal of Labor Research, Springer, vol. 32(4), pages 362-389, December.
    7. Ilhom Abdulloev & Gil S. Epstein & Ira N. Gang, 2014. "Ethnic Goods and Immigrant Assimilation," Working Papers 2014-03, Bar-Ilan University, Department of Economics.
    8. Sergio Vergalli, 2008. "The Role of Community in Migration Dynamics," LABOUR, CEIS, vol. 22(3), pages 547-567, September.
    9. Marion Jansen & Roberta Piermartini, 2009. "Temporary Migration and Bilateral Trade Flows," The World Economy, Wiley Blackwell, vol. 32(5), pages 735-753, May.
    10. Gil S. Epstein & Ira N Gang, 2006. "Migrants, Ethnicity and Strategic Assimilation," Departmental Working Papers 200630, Rutgers University, Department of Economics.
    11. Andreas Knabe & Steffen Rätzel & Stephan L. Thomsen, 2013. "Right-Wing Extremism and the Well-Being of Immigrants," Kyklos, Wiley Blackwell, vol. 66(4), pages 567-590, November.
    12. Gil S. Epstein, 2012. "Migrants, Ethnicity and the Welfare State," Korean Economic Review, Korean Economic Association, vol. 28, pages 117-136.
    13. Moretto, Michele & Vergalli, Sergio, 2008. "Managing Migration through Quotas: An Option-theory Perspective," Knowledge, Technology, Human Capital Working Papers 37818, Fondazione Eni Enrico Mattei (FEEM).
    14. Dana Schüler & Julian Weisbrod, 2010. "Ethnic fractionalisation, migration and growth," Empirical Economics, Springer, vol. 39(2), pages 457-486, October.
    15. Jacques Poot & Anna Strutt, 2010. "International Trade Agreements and International Migration," The World Economy, Wiley Blackwell, vol. 33(12), pages 1923-1954, December.
    16. Michele Moretto & Sergio Vergalli, 2010. "Managing Migration Through Conflicting Policies: An Option‐Theory Perspective," Scottish Journal of Political Economy, Scottish Economic Society, vol. 57(3), pages 318-342, July.
    17. Massimiliano Bratti & Luca Benedictis & Gianluca Santoni, 2014. "On the pro-trade effects of immigrants," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(3), pages 557-594, August.
    18. Sergio Vergalli, 2006. "Dynamics in Immigration Community," Working Papers ubs0613, University of Brescia, Department of Economics.
    19. Gil Epstein & Yosef Mealem, 2010. "Interactions between local and migrant workers at the workplace," CReAM Discussion Paper Series 1016, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
    20. Peter H. Egger & Maximilian von Ehrlich & Douglas R. Nelson, 2012. "Migration and Trade," The World Economy, Wiley Blackwell, vol. 35(2), pages 216-241, February.
    21. Harrie Verbon & Lex Meijdam, 2008. "Too many migrants, too few services: a model of decision-making on immigration and integration with cultural distance," Journal of Population Economics, Springer;European Society for Population Economics, vol. 21(3), pages 665-677, July.
    22. Devesh Roy & Abdul Munasib & Xing Chen, 2014. "Social trust and international trade: the interplay between social trust and formal finance," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(4), pages 693-714, November.
    23. Dana Schüler & Julian Weisbrod, 2006. "Ethnic Fractionalization, Migration and Growth," Ibero America Institute for Econ. Research (IAI) Discussion Papers 148, Ibero-America Institute for Economic Research.
    24. Richard B. Freeman, 2013. "One Ring to Rule Them All? Globalization of Knowledge and Knowledge Creation," NBER Working Papers 19301, National Bureau of Economic Research, Inc.
    25. Gil Epstein, 2009. "Willingness to Assimilate and Ethnicity," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 35, pages 1-1.

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    More about this item

    Keywords

    assimilation; contracts; discrimination; ethnicity; international trade; market structure; migration; network; transnational;
    All these keywords.

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • I20 - Health, Education, and Welfare - - Education - - - 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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